Housing association strikes £120m funding deal | Housing Finance Network news

Housing association strikes £120m funding deal

A £120m private placement funding deal with four North American investors will help Eastlight Community Homes deliver 3,800 new homes in the five years to 2026.

The housing association increased the amount it planned to borrow due to strong investor demand that saw the deal significantly oversubscribed.

The overall interest rate for Eastlight’s debut private placement will generate significant funding cost savings, totalling over £1m per year more than expected.

The Essex and Suffolk-based housing provider received £60m of the funds on 19 August, with the balance due in May 2022. NatWest acted as sole Private Placement Agent. 

David Hall, Executive Director of Resources at Eastlight, said: “We were clear when we created Eastlight in July last year through a merger, that we would ensure residents felt the benefits of our increased scale. This private placement at a very competitive price is clear evidence of this and will go a long way to delivering our promise of providing 3,800 new homes between 2021 and 2026. 

“We launched with an interactive virtual roadshow which successfully engaged investors and who asked us a wide range of questions, covering our development strategy, sales programme, financial performance, COVID-19 response and strength of governance.

"They were also keen to understand more about the benefits of Eastlight’s community gateway shareholder structure that many had not seen before.”

David added: “We are very grateful for the support of our team of advisors who helped to complete this exciting deal for us. Together we have achieved a great outcome and we are delighted to be working with four new overseas investors for the first time. 

"We did not specifically target North American investors but it was thought they were likely to offer better value and that was the case – we outperformed our expectations.”

George Flynn, Debt & Financing Solutions at NatWest, said: “We’re delighted to have supported Eastlight on its inaugural private placement issuance. This transaction positions Eastlight very strongly with supportive institutional investors and will enable Eastlight, together with its communities, to create affordable homes and great neighbourhoods.

“The competitive pricing and strong investor interest, including four new long-term North American institutional investors, is testament to Eastlight’s credit strength and its management’s efforts during the distribution phase.

"It also highlights the importance of appointing an experienced agent with deep relationships with investors globally in order to source strong levels of demand.”