Linc and JCRA, the independent financial risk advisor, today announce that Linc has successfully secured £95 million of new funding alongside a full restructure of its bank debt portfolio. The new and restructured funding will help deliver over 1,600 new homes across South Wales over the next ten years.
The total funding package, advised and supported throughout by JCRA, included securing a private placement of £75 million from two institutional investors, representing one of the largest placements by a Welsh housing association. The placement also included the introduction of a new investor to the Welsh social housing market.
The private placement, was structured with significant deferred issuance (two tranches, six and 13 months deferred), to reduce Linc’s short term cost of funds. The placement also included three staggered maturities to help manage refinancing risk (2048, 2044, 2054) while extending the weighted average life of Linc’s debt portfolio to almost 20 years.
Over the past 18 months, JCRA evaluated Linc’s funding capacity as a business, while working closely with Linc to advise on the optimal funding strategy to achieve Linc’s aspirations and unlock balance sheet capacity.
A new covenant suite across more than £100 million of funding with three existing bank funders was negotiated and the lending margin on a proportion of the loans reduced. In addition, JCRA ensured that the economic value of other legacy loans was protected and that the new funding package unlocked funding capacity without the payment of significant break costs on fixed rates.
During the process, JCRA also introduced Handelsbanken to Linc, leading to a new £20 million facility, representing the bank’s first short-term, flexible funding arrangement to a housing association in South Wales.
Alex Morgan, Associate Director at JCRA, commented: “We have worked closely with Linc to develop a funding strategy that not only creates value but also unlocks funding capacity and ultimately supports the delivery of more affordable homes for South Wales. We are delighted to be involved with Linc and achieve £75 million of new long-term funding via a private placement, at low cost, moving the debt portfolio to fit for purpose and standardised covenant suite, as well as introducing the new short-term, flexible funding through Handelsbanken. The private placement attracted strong demand, ultimately leading to the introduction of a new investor to the Welsh social housing sector.”
Scott Sanders, CEO of Linc-Cymru Housing Association, said: “This significant funding boost will help us to provide more homes for those that need them most. Affordable housing plays an important role in providing a safe and secure environment for people to live, as well as helping people to improve their health and wellbeing. JCRA was a fantastic partner for us in securing vital capital and we are excited to build on our recent success.”
JCRA’s Social Housing team has over 30 years’ experience offering independent treasury and funding advice to housing associations throughout the UK. The team provides debt restructuring and refinancing advice, debt capacity reviews, M&A evaluations, hedge and derivatives management, as well as assisting with reporting on treasury governance and objectives.
Linc specialises in the affordable housing, social care and health sectors in Wales by providing homes, advice and services to existing and prospective tenants across the social, intermediate and market rent sectors.