Pension Funds Insider

Pension Funds Insider brings the latest pensions news and industry insights; from investment and governance updates to new mandate appointments and pensions regulatory information.

Staffordshire Housing Association in £22m deal with M&G Investments

09 July 2015

Image for Staffordshire Housing Association in £22m deal with M&G Investments

M&G investments has struck a deal with a housing association to secure long-term cash flows for its pension fund clients.

Staffordshire Housing Association, a significant provider of social housing in Staffordshire and Cheshire, has borrowed GBP 22million in a long-term financing deal from international investment manager M&G.

Mark Davie, head of social housing for M&G, said: "Our pension fund clients continue to seek cash flows over the long terms that are secured against residential property."

The deal is indicative of a trend for investing in social housing projects and benefits both parties – the local authority and the funds.

Until 2007, housing associations generally relied on banks and The Housing Finance Corporation to meet their external funding requirements.

In recent years non-bank lenders such as M&G have been providing an increasing amount of longer term finance as banks withdraw from this market.

M&G has invested more than GBP 6bn in UK social housing through property transactions, public bonds and private placements.

"Financing for this type of housing association enables housing authorities to contribute towards meeting the growing demand for affordable housing in the local communities," said Mark Davie.

"Staffordshire Housing plays an integral role in the community it serves."

The 35-year private placement also provides Staffordshire Housing with enough flexibility to fulfill its development ambitions over the next three years and refinance existing debt.

Rob Morton, commercial finance director for Staffordshire Housing Group said the deal has increased the long term certainty of financing cost in its business plan.

He said: "This stability gives Staffordshire Housing a solid foundation for making new development decisions in the future.

"The team at M&G impressed me with their supportive approach throughout the deal process and we look forward to our future partnership with them"

First published 09.07.2015