Peabody completes new sustainability linked loan
Peabody and NatWest have completed a new sustainability-linked loan agreement to support the delivery of new affordable homes.
The agreement renews an existing tranche of funding, extending the term to ten years and increasing the funds available from £17.5m to £70m linked to specific environmental targets.
The sustainable metrics will measure the energy performance of existing Peabody homes, with a focus on improving average SAP ratings, and the delivery of more electric vehicle charging points on Peabody estates. Achieving the targets would reduce the cost of borrowing and bring tangible benefits to Peabody communities.
These objectives are closely linked to Peabody’s new sustainability strategy which sets out an ambition to be net zero carbon in new and existing homes by 2050 and in day-to-day business activities by 2030. This includes plans to improve the environmental sustainability of existing homes and electrifying the over 200 strong fleet of Peabody vehicles. Plans are in place to double the amount of electric charging points on estates for both employees and residents to use by 2025.
The agreement also incorporates the conversion from LIBOR to SONIA for all of Peabody’s c£280m loan facility with NatWest. The replacement of interest rates based LIBOR (London Inter-Bank Offered Rate) with SONIA (Sterling Overnight Indexed Average) is required on all Sterling loans by 31 December 2021 as recommended by the Financial Conduct Authority and the Bank of England , following the removal of LIBOR on the basis of its vulnerability to manipulation.
Peabody was at the forefront of initiating the new Sustainability Reporting Standard for Social Housing last year and is due to publish its first ESG report this autumn.
Anthony Marriott, Peabody’s director of treasury & corporate finance said: “Peabody has made great strides over the past 12 months in assessing our environmental performance and setting out a strategy to improve on a range of sustainable criteria. Aligning our social purpose and sustainability strategy with our funding costs for the future makes good business sense and we are delighted that we can continue and extend our strong relationship with NatWest through this agreement.”
Hedley Hatfield, director of housing finance at NatWest said: “NatWest is delighted to have been able to support Peabody with the provision of £70m of funding. We want our customers and wider communities to succeed, increasing social housing so that more people can have an affordable and safe place to call home is a key part of that.
“Providing a sustainability linked loan is an excellent way for the bank to help Peabody with its priority of improving the environmental sustainability of their homes and encouraging the increased usage of electric vehicles by their customers and partners by providing additional conveniently placed charging points. Having two separate objectives is something we are starting to see more of in the social housing sector, ensuring that any benefits we can pass on to borrowers is maximised.”
“The funding for Peabody forms part of NatWest’s commitment to support the housing association sector with £3 billion of new funding by the end of 2022.”