Newcastle housing association Home Group has secured £350m from investors to finance plans to build 10,000 new homes.
Home Group, which is one of the UK’s largest housing associations, has raised the cash after issuing a 24-year bond.
The deal has allowed the company to receive £250m from its investors immediately, and given it the option to access a further £100m in the future.
Raising the money will support Home Group to build 10,000 homes across the UK by 2020.
The not-for-profit already has 15,000 homes across the North East and is in the process of adding to this through the development of 1,500 units in South Seaham, in County Durham.
The development will see Home Group build 750 affordable houses at the site, which will be designed for a range of buyers, from first-time buyers to those in need of assisted living. A further 250 homes will be sold on the open market.
Land for 500 additional houses will also be sold to private sector housebuilders. Profits from the sale will be used to subsidise the construction of a school and other community facilities in the village centre.
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Home Group’s CEO Mark Henderson said: “This is a great deal, and a one that reaffirms Home Group’s strength as an organisation.
“The deal will go a long way in helping us to achieve our mission to build homes, aspirations and independence. It will also support our target of delivering 10,000 homes by 2022.”
The bond was issued following investor meetings in London and Edinburgh last week. The bond was oversubscribed, Home Group said.
The company was supported throughout the process by its bookrunners - HSBC, MUFG, and Natwest Markets - and treasury advisers Centrus.
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Ben Broad, managing director in Debt Capital Markets at HSBC, said: “This transaction is Home Group’s first since 1987 and the fact that the company managed to achieve the lowest coupon for a new long-dated UK housing association issue since April 2018 reflects the strong demand for low risk social housing and favourable gilt levels as investors continue to seek high quality assets.”
Jonathan Clarke, managing director at Centrus, said: “This transaction is the culmination of six months’ work on strategy and long-term funding at this level is a great outcome for Home Group’s management team and customers.”
