Bromford and NatWest agree £200m sustainable finance deal

Bromford and NatWest agree £200m sustainable finance deal

Regional housing association Bromford has finalised a new sustainable finance deal with NatWest as it continues its focus on the development of new affordable, energy efficient homes.

The 50,000 home social landlord has secured a £200 million sustainability linked loan with NatWest, one of the housing sector’s most prominent lenders, split into two £100 million tranches which mature in 10 and 11 years respectively. The loan will enable Bromford to build 1,300 new affordable homes, furthering its commitment to providing high-quality, affordable housing to communities across the West Midlands and West of England.

Bromford’s Director of Treasury Imran Mubeen, said: “NatWest have been one of our key strategic funding partners for several years. The speed and focus with which we have closed this deal is a testimony to our relationship and underlines the ongoing importance of bank lending in our sector. We had considered a return to the capital markets this year, but we continue to refresh and optimise our new funding strategy in view of prevailing market conditions. This deal enables us to benefit from the prevailing arbitrage between the SONIA swap and gilt curve to generate significant interest savings over the life of the loan. Ultimately, this means we can invest even more in our communities and customers.”

Bromford is one of the country’s leading developers of affordable housing and last year completed 1,191 new homes, including 308 for affordable rent and 551 for social rent. According to information from Inside Housing’s annual Biggest Builders survey, Bromford is ranked first in the country for the number of social rent homes completed during 2023-24 and has built more social rent homes than any other housing association in the country over the past four years1.

Amanda Swann, Director of Development at Bromford said: “We exist to provide safe, affordable homes to people who are unable to access them through the market. With demand for affordable housing showing no signs of decreasing, we are committed to playing our part in tackling the housing crisis by continuing to build affordable homes. Our track record over the past few years demonstrates this commitment, especially around building homes for social rent which accounted for nearly half of all the homes we built last year. This loan from NatWest will allow us to continue our development programme to meet our ambition of building 11,000 new homes by 2032 with 65% at social and affordable rent tenures.”

In line with Bromford’s commitment for all new funding to be sustainability linked, the loan with NatWest is the association’s seventh issue from its Sustainable Finance Framework which was first published and accredited in 2021. This deal is linked to Bromford-led targets focused on delivering new social rented homes and reducing Scope 1, 2 and 3 carbon emissions. Bromford will receive a discount on its interest payments if it meets the targets associated with the loan.

Imran added: “Our shared vision with NatWest regarding sustainable finance created the first green loan in the sector in 2019 which focused on improving the energy efficiency of our homes and has helped to enable our decarbonisation journey with 89% of our homes now at EPC C or above.

“This new deal captures our sustainability ambitions for a new era, as we continue to expand our new homes programme with a focus on social rented homes, and as we extend the focus of our carbon journey beyond EPC ratings to focus on our Scope 1, 2 and 3 carbon emissions. Importantly, the loan has the potential to generate over £1 million of interest savings if we successfully meet our sustainability targets which may challenge even the most sceptical of juries to reconsider the financial and broader benefits of sustainability linked loans.”

Paul Eyre, Head of Residential and Housing Finance at NatWest Group said: “Our funding support to Bromford forms part of our ongoing commitment to supporting the social housing sector and its delivery of affordable, safe and energy efficient homes. 

“We announced an ambition earlier this year to provide £5bn of funding commitments to the social housing sector to December 2025.This additional funding brings our progress against this to £1.7bn. We are proud to help Bromford continue its great work of further investment in new affordable homes in the West Midlands and West of England.”

Grant Vaughan, Treasury Adviser at Newbridge, said: “Having successfully accessed the private placement market in 2023, Bromford has now further diversified their funding base by securing term bank debt. This strategic move reflects Bromford’s pro-active commitment to securing competitively priced funding deals when they are in the market. The deal leverages the dislocation between the SONIA and gilt positions to deliver significant interest savings.

“We at Newbridge are delighted to have supported Bromford’s treasury team in structuring, negotiating, and executing this latest sustainability-linked term loan. This collaboration not only underscores our commitment to fostering sustainable finance solutions but also highlights our ability to support our clients’ evolving financing needs in response to dynamic market conditions.”

Over the past year Bromford has secured more than £650 million of sustainable finance to deliver the objectives set out in its Sustainable Finance Framework, from the delivery of new, affordable, more energy efficient homes to coaching more customers into employment and training and reducing the organisation’s gender pay gap.

Legal advice was provided by Devonshires, Clarke Willmott and Trowers & Hamlins acting on behalf of Bromford and Addleshaw Goddard LLP acting on behalf of NatWest.

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