Monday, 26 October 2021 09:00

Hanover Scotland secures £40m in first-of-its-kind-deal

Hanover Scotland has secured a £40million funding facility, arranged by Bank of Scotland, which is the first of its kind in the country’s social housing sector.

The funding will be used to support its ongoing development plans, which include a goal of building at least 40 new units a year. Currently Hanover manages 5,000 properties across 200 developments in Scotland, with a focus on housing for older people.

Hanover’s main office is in Edinburgh, and also has bases in Glasgow and Elgin.

Bank of Scotland has helped the firm secure a five-year, £20million revolving credit facility, while it has also agreed a £20million private placement from an institutional investor. This will be drawn down in 2018, mature in 2048, and be used to repay the RCF, which will be adjusted to £5million in 2018.

The structure of the facility is the first of its kind in the social housing sector, as the two deals are formally linked and share the same security.

Helen Murdoch, chief executive of Hanover Scotland, said: “The versatility of the structured borrowing fully meets our planning requirements. Hanover has an established history in providing high quality affordable housing for the elderly and this funding will enable us to continue to meet our ambitions to provide much needed new homes.

It is clear that Bank of Scotland fully understand our sector. We believe that our arrangement provides good value for money for our existing and future residents, which is extremely important and is our ultimate goal.”

Marc Ward, relationship manager in the social housing team at Bank of Scotland, said: “This is a tailored, innovative solution which meets the long-term funding needs of Hanover Scotland while also providing short-term liquidity to support its development goals. We believe the structure – combining a conventional revolving credit facility with a private placement – is the first of its kind in the sector.

“These are transformative times for housing associations as the funding environment continues to shift around them. This deal, which includes securing funding from a blue-chip institutional investor, underlines that the investment community continues to place great value on the social housing sector and the crucial role it plays in the UK.”

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