Term Loan for Housing Plus Group to fund improvements and new homes
Housing Plus Group provides affordable homes and care services in Staffordshire and Shropshire. The Group’s businesses share one vision – to be a resilient organisation, that makes a positive difference to homes, lives, and communities. They include:
1) Homes Plus which owns more than 19,000 affordable homes and also provides employment and money advice for customers, as well as support and investment in its neighbourhoods;
2) Care Plus which specialises in housing and support for older people and those with physical or learning difficulties. It manages 55 retirement living communities, as well as a residential nursing home;
3) Severn Homes which offers high quality homes for market rent and shared ownership;
4) Property Plus which provides maintenance and improvements for Housing Plus Group’s homes and green spaces; and
5) County Town Homes which markets high quality housing developments for outright sale.
A £50m term loan and loan-linked ISDA offer cash security and hedging flexibility
Housing Plus Group approached us to help them fund their investment plans and to also give them options for handling their interest rate risk. We worked closely with both Housing Plus Group and their retained treasury advisor, Savills Financial Consultants, to devise a 15-year £50m term facility executed alongside a loan-linked ISDA to offer the funding and flexibility they needed to manage their interest rate risk.
A word on loan-linked ISDA agreements
An increasing number of housing associations are looking at both loan-linked and standalone ISDA agreements to manage their interest rate risk. With a loan-linked ISDA, any hedging executed under the documentation has a contractual link to the underlying loan and therefore benefits from the same security pledged under the loan agreement. As a result, housing associations are usually not required to provide any additional security for the purpose of covering any risk related to the hedge.
Compared to a traditional fixed rate loan, hedging through a loan-linked ISDA affords housing associations far greater flexibility over when they can hedge, how much they hedge, and which hedging instruments they can use. For example, hedging under a loan-linked ISDA allows customers to hedge any portion of the loan for any maturity up to the maturity of the underlying loan agreement, and a loan-linked ISDA also allows the borrower to execute hedging on a forward basis too.
NatWest proud to enable more people have an affordable, high-quality place to call home
Paul Holland, executive director of finance, Housing Plus Group, said: “The Housing Plus Group have recently concluded on a new facility agreement and ISDA with NatWest and we are looking forward to developing the partnership further during 2024. We consider NatWest to be a key partner in the development of our new Corporate Plan and the new funding will enable the group to provide more new homes and additional stock investment for the benefit of our current and future customers. NatWest’s relationship management made the process very straight forward and both the facility and ISDA completed within the required timescales. Based on our experience the Housing Plus Group would be happy to recommend working with NatWest for any new funding requirements.”
Dean Holleyman, director of housing finance at NatWest commented: “We are delighted to be able to provide Housing Plus Group (HPG) with this new funding to enable more people have an affordable, energy efficient and safe place to call home. We have seen the great positive impact Housing Plus Group makes in the communities that it serves, and we are proud to help them continue their excellent work by funding further investments in its new and existing housing stock in Staffordshire and Shropshire.”
Dominic Brindley, head of public sector, specialist financing and risk solutions, NatWest added: “We’re pleased to have been able to support Housing Plus Group with this hedging solution that provides the flexibility they were looking for to manage their interest rate risk. It follows a growing trend among housing association customers opting for ISDA-based hedging options for the greater flexibility they offer.”
