Funding Affordable Homes secures £56 million debt refinancing
Funding Affordable Homes (FAH), a social impact fund which invests in UK affordable housing, has completed a £56 million debt refinancing, reducing its interest payments by more than half.
FAH has secured a £56 million, 20-year facility from a European bank, replacing nine existing facilities provided by three lenders, including Barclays and Secure Trust Bank. The interest rate on the new facility is based on an inflation-linked gilt rate, aligned with FAH’s inflation-linked rents. Centrus, a certified B Corporation, acted as advisor and arranger to FAH on the refinancing.
FAH is an Article 9 “dark green” fund under EU SFDR classification with the objective of delivering an increase in the number of affordable homes, delivering positive social impact and providing attractive, stable and progressive returns to its investors. It was relaunched in November 2022 with an evergreen structure and subsequently secured a £30 million commitment from Strathclyde Pension Fund. It typically provides forward funding to enable new properties to be built and managed by established Registered Providers of housing, but it also owns and utilises its own housing association, Funding Affordable Homes Housing Association (FAHHA).
FAH’s portfolio comprises 768 existing homes across 10 schemes, valued at £135 million, offering affordable homes to up to 1,300 people across the UK. Its real estate and investment adviser, Edmond de Rothschild Real Estate Investment Management (EdR REIM), intends to grow the portfolio to more than £500 million, delivering up to 3,000 affordable homes across the UK. EdR REIM benefits from an experienced, specialist residential team and its broader vertically-integrated residential platform, which also includes private rental strategies across the UK.
Adrian D’Enrico, fund manager of FAH, said: “This refinancing is a significant milestone for FAH, more than halving our cost of debt and providing a stable base from which to raise and deploy equity into delivering more homes. It reflects the increasing appetite from the banking and investor universe for affordable housing as an asset class. We now aim to raise further equity capital to enable the development of our significant pipeline of new opportunities, which will deliver much-needed homes across the UK”.
Lawrence Gill, Director at Centrus, said: “We are pleased to have supported Funding Affordable Homes in arranging funding so key to its long-term strategy, supporting objectives to deliver more affordable homes and social impact. The successful outcome of this refinancing project has provided FAH with a strong foundation and greater flexibility in the future.”
ABOUT FUNDING AFFORDABLE HOMES
FAH specialises in the acquisition and development of affordable housing. Its goal is to facilitate the provision of new affordable housing throughout the UK, by funding development for Registered Providers, such as Housing Associations and Local Authorities. Led by a team of highly experienced sector figures, finance professionals and board members, FAH believes that financial and social returns can and should be complementary in the provision of affordable housing. FAH takes a long-term approach combined with close partnerships with Registered Providers, who fully manage FAH portfolio homes alongside their own, whjle also working directly with house builders and property developers. Overall, FAH develops opportunities to both increase the affordable housing stock and enable investors to achieve their social impact objectives and fiduciary responsibilities by acquiring assets offering long-term, inflation-linked financial returns.
DISCLAIMER
This document is intended for professional investors only, as defined under MiFID. Edmond de Rothschild Real Estate Investment Management declines any liability for the use that may be made of the information contained in this document.
The information contained in this document does not constitute an offer or solicitation to trade in any jurisdiction in which such offer or solicitation is unlawful or in which the person making such offer or solicitation is not qualified to act. This document does not constitute and should not be construed as investment, tax or legal advice, nor as a recommendation to buy, sell or continue to hold any investment. The Edmond de Rothschild Group shall not be held liable for any investment or divestment decision taken on the basis of the information contained in this document.