Legal & General has agreed a new GBP102m, 15-year debt facility to The Hyde Group, one of the largest housing associations in England, representing its first loan to the sector.
The deal is structured as separate loan agreements to two of Hyde’s core subsidiaries, Hyde Southbank Homes (HSH) and Hillside Housing Trust, providing GBP61m and GBP41m respectively. The loans are non-recourse to Hyde and at a fixed rate for their duration.
Formed in 1967, with the aim to make a lasting difference, Hyde has grown into one of the main providers of social housing in London and the South East. Hyde owns or manages circa 49,000 properties with a wide range of tenures.
This loan marks L&G’s commercial lending business’s entrance into the social housing sector, having announced its intention to do so last year and subsequently hiring specialist Alex Gipson from RBS, as well as additional resourcing in the credit team at the start of 2013, to support this process. L&G believes it can fill the gap left in the market for associations that want to borrow smaller amounts by providing bi-lateral loans, down to as low as GBP25m, and more bespoke solutions than the capital markets or banks are able to provide.
Simon Peacock, group finance director at Hyde, says: “We are delighted to have secured these loans, which will enable us to continue our momentum in making a lasting difference to housing availability in key locations. We were very pleased by the options offered to us by L&G, which enabled us to take advantage of favourable all-in costs of financing available in today’s capital markets and for a duration which matches the long-term nature of our business. We look forward to a long and productive relationship with them.”
Alex Gipson (pictured), social housing lending manager at Legal & General, says: “The very nature of an insurer’s long-term pension and life insurance liabilities provide much closer alignment with the borrowing desires of the Housing Association sector. The housing need is not only an incredibly pressing one today, but stretching far into the future, and Hyde is a strong, long term operator with an inspirational and dynamic approach, which recognises that its funding provisions have to match its business profile.”
Hyde was advised by LCF Edmond de Rothschild Securities, the London corporate finance arm of the Edmond de Rothschild Group.