Harper Macleod completes housing association hat-trick with £35m PoLHA funding deal

Derek Hogg
Derek Hogg

The Housing team at Scottish law firm Harper Macleod has now acted in the only three private placements by Scottish housing associations to take place to date, with a combined value of over £120 million.

Led by Partner Derek Hogg, the team achieved the hat-trick after advising Port of Leith Housing Association (PoLHA) in securing a new £35m private funding facility to support its plans to build over 480 homes for social and mid-market rent in Leith and North Edinburgh by 2020.

Derek Hogg said: “We are delighted to have been able to support Port of Leith Housing Association in this funding exercise, using a private placement route which is still new in a Scottish Registered Social Landlord (RSL) context but which can provide flexibility and long-term funding support at competitive pricing rates.

“Given the continuing need for new affordable housing in Scotland, it is very encouraging to find that there is strong demand from institutional investors to provide long-term funding to strong well-performing RSLs based in Scotland. And coupled with a shorter-term loan facility from conventional lenders to the sector, private placements can also provide the flexibility required by RSLs to deliver a development programme, so they are definitely an option to be explored when RSLs are considering raising new finance.”

Port of Leith Housing Association plans to build home at Granton Harbour
Port of Leith Housing Association plans to build home at Granton Harbour

The PoLHA deal combines a revolving credit facility (RCF) and a private placement (PP) finance deal that has been arranged by Bank of Scotland. Harper Macleod acted as issuer counsel to PoLHA, advising the association on all aspects of the negotiation and finalising of the initial RCF loan agreement and then the private placement documentation, as well as the ancillary property charging exercise. The Association was also supported through the successful completion by Capita, as treasury advisers.

An initial £10m revolving credit facility with Bank of Scotland will be paid down in stages and will run until 2019. The housing association has also agreed a £35 million private placement with the pension fund Canada Life.

This 30-year private bond issue will enable finance to be drawn down in stages over the next two years, providing the private finance element to support new development over the next four years.

Keith Anderson, chief executive of PoLHA, said: “This has been our first venture into the capital markets, and the expert advice and support we have received throughout from Harper Macleod has played an important part in what is a very successful outcome for the Association.”

Harper Macleod has previously advised on Link Group’s £45m private placement in 2014, the first of its kind in the Scottish social housing sector. Last year, the firm followed that up by advising Hanover Scotland as it secured £40m of funding via a linked revolving credit facility and private placement.

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