Watford HA secures £65m private placement with M&G
Watford Community Housing Trust has completed its first standalone deal in the debt capital markets with a £65m private placement with M&G Investments.
The trust said it will use the finance, the rate of which is undisclosed, to support the construction of 675 homes over the next three years across south west Hertfordshire, where it owns and manages around 5,000 properties.
The 5,300-home association – which was established following a stock transfer from Watford council in 2007 – has committed to build 1,000 new dwellings by 2020, 100 of which have already been delivered.
Some of the new finance will support homes being brought forward via the trust’s joint ventures with Watford and Three Rivers councils.
It set up Hart Homes with Watford Borough Council to develop and manage homes, access additional sources of funding and make more effective use of public land.
The issuance is over a 32-year period when it is due to be repaid in full.
The stock transfer association secured a £30m loan through the UK government’s affordable homes guarantee programme last year.
At the last financial year end in March 2017, the group had long-term borrowing facilities from one lender totalling £145m, of which £98.3m was drawn. It said that the £145m facility reduced to £130m in April 2017 and the group had £35.1m in a sinking fund ahead of drawng the Affordable Housing Finance money.
Paul Richmond, the trust’s group director of finance and resources, said the private placement would be used to support new build with the maintenance of its existing stock fully funded under its existing finance plan.
The deal is M&G’s third in the housing association sector over the last 12 months, having concluded financing deals for £85m and £45m with One Housing and Hightown Housing Association respectively.
Mr Richmond said: “We had a number of people who were very keen on the placement: M&G put a very credible offer on the table.
“We were delighted by the level of interested generated by this placement and look forward to working with M&G as an investment partner.”
One of the factors that had attracted M&G was the trust’s ‘controlled exposure’ to the private new build market, which he said comprised a relatively small share of its total development pipeline.
Mark Davie, head of social housing at M&G, said the deal “brings benefits to our pension fund clients by generating long term cashflows that are secured against residential property”.
Barclays acted as arranger. JCRA advised the housing association.
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