Hanover Scotland secures first-of-its-kind £40m funding facility
The transaction, which combines a five-year, £20m revolving credit facility and private placement, was arranged by Bank of Scotland, with whom Hanover has had a relationship for nearly 20 years. The funding will be used to support its ongoing development plans, with a particular focus on housing for older people.
Hanover has also agreed a £20m private placement funded by an institutional investor. This finance, which will be drawn down in 2018 and mature in 2048, will be used to repay the RCF which will itself be adjusted to £5m in 2018.
The structure of the facility is the first of its kind in the social housing sector as the RCF and private placement are formally linked and share the same security. Meanwhile, the mix of short-term funding from the RCF combined with a longer-dated private placement provides Hanover with a flexible finance package tailored to suit its ongoing needs.
Helen Murdoch, chief executive, said: “The versatility of the structured borrowing fully meets our planning requirements. Hanover has an established history in providing high quality affordable housing for the elderly and this funding will enable us to continue to meet our ambitions to provide much needed new homes.
“It is clear that Bank of Scotland fully understand our sector. We believe that our arrangement provides good value for money for our existing and future residents, which is extremely important and is our ultimate goal.”
The RCF was arranged by Bank of Scotland’s dedicated social housing team, while the private placement was handled by the bank’s debt capital markets team.
Marc Ward, relationship manager in the social housing team at Bank of Scotland, said: “This is a tailored, innovative solution which meets the long-term funding needs of Hanover Scotland while also providing short-term liquidity to support its development goals. We believe the structure – combining a conventional revolving credit facility with a private placement – is the first of its kind in the sector.
“Meanwhile, the dual role on this transaction played by our sector-focussed social housing team and our colleagues in debt capital markets demonstrates the breadth of our offering to our clients.
“These are transformative times for housing associations and the funding environment continues to shift around them. This deal, which includes securing funding from a blue-chip institutional investor, underlines that the investment community continues to place great value on the social housing sector and the crucial role it plays in the UK.”