Some £350m has been invested in the future for UK’s rental sector this week with LendInvest and The PRS REIT plc signing off on major deals.
LendInvest received £200m investment from the National Australia Bank (NAB) to expand its capacity to lend in the UK Buy-to-Let market.
Scottish Widows has provided a £150m long term loan facility to The PRS REIT plc, the closed-ended real estate investment trust established to invest in new-build homes for the Private Rented Sector.
LendInvest has now raised almost £2bn in debt and equity.
“And in many respects we’re just getting started.
“We have dominated in the short term mortgage market for years, and we’re now bringing our technology and growing distribution footprint, to take market share in the longer-term mortgage market,” said Christian Faes, Co-Founder & CEO of LendInvest.
The deal has Westminster’s attention.
Chris Philp, PPS to the Chancellor of the Exchequer, said the “very substantial investment” was important example of how global institutions are motivated to back not only the UK’s thriving Fintech sector, but throw their weight behind the country’s property sector in a long-term and meaningful way.
“It’s encouraging to see LendInvest push even further in buy-to-let, taking their technology into markets where financial innovation is yet to make its mark,” he said.
LendInvest launched its first Buy-to-Let mortgage product in late 2017 after agreeing a substantial funding line with Citigroup and has already lent more than £370m in Buy-to-Let loans while taking market share in the bank dominated market.
In June this year, LendInvest also become the UK’s first Fintech business to securitise its own portfolio of assets worth £259m – which received a AAA rating from Moody’s and Fitch.
Earlier this year, LendInvest announced a separate £200 million funding line with HSBC UK earlier this year, to enter the regulated homeowner loan market for the first time.
NAB joins a growing roster of global financial institutions choosing to invest in LendInvest’s secured property loans.
“NAB is delighted to work together with LendInvest and play a role in achieving its growth plans. This new warehouse facility underlines NAB’s commitment and capability to support lenders that shape the mortgage market of tomorrow,” said James Versmissen, Associate Director at NAB.
The 25-year Scottish Widows loan to PRS REIT provides a £150m long term loan facility, secured by a portfolio of 1,500 UK newly built private family rental homes.
It follows a £100m 15-year loan provided by Scottish Widows to PRS last year.
The new loan facility was negotiated by The PRS REIT’s Investment Adviser, Sigma PRS Management Limited – a subsidiary of Sigma Capital Group plc.
“We have worked closely with Sigma Capital to put in place this new long-term loan for The PRS REIT plc, building on our strong relationship following the Scottish Widows funding support provided last year.
“We are proud to be increasing our commitment to the housing sector and this loan supports the provision of much needed quality family homes for rental,” said Jason Morris, Director of Scottish Widows Loan Investments.
Graham Barnet, Chief Executive Officer, Sigma Capital Group plc, said an “excellent” working relationship had been established with Scottish Widows over the past year.
“The team understands our business and objectives, and this loan will help us to achieve our target of creating a substantial portfolio of new, high-quality rental homes across the regions of England.
“With our funding resource now approaching £900m, we are in an excellent position to deliver our target of over 5,500 new rental homes,” he said.
- Also on the money this week is Peabody Trust, which has secured a new 5 year £75 million revolving credit facility provided by BNP Paribas.
The facility is structured as a sustainability-linked loan (SLL) where the interest rate is tied to Peabody meeting social impact-based key performance indicators.
Under the terms of the agreement, Peabody will benefit from a lower interest rate margin on the loan if it delivers an agreed number of accredited childcare qualifications under their Childcare Training Programme.
This target rises incrementally over the 5 year life of the loan.
Peabody will draw on the loan for general corporate purposes in their mission to provide affordable housing and will reinvest interest rate savings into the Peabody Community Foundation (PCF), which benefits thousands of Londoners every year and meets several UN Sustainable Development Goals (SDGs), including no poverty (SDG1), decent work and economic growth (SDG8), reduced inequality (SDG10), Sustainable cities and communities (SDG11), and partnerships (SDG17).
The loan is part of BNP Paribas’ programme of responsible investment in the UK social housing sector, generating sustainable returns and adding social value in its area of operations.
Like Peabody, BNP Paribas has operated in the UK since the 1860s and both are committed to aligning their businesses to the UN SDGs.
“We know that the lack of flexible, affordable childcare in London is a major problem. It leads to lower rates of employment, disproportionately affecting mothers, and contributes to unacceptable levels of inequality and child poverty. Many working people find themselves burdened by debt from expensive childcare costs,” said Susan Hickey, Chief Financial Officer, Peabody.
“The savings we’ll make on interest payments by facilitating affordable childcare will be directly invested into the Peabody Community Foundation.
“Innovative funding arrangements like this are a win-win for people living in our neighbourhoods. We’re pleased to be working with the investor community to maximise our impact in helping people prosper,” she said.
BNP Paribas has worked with three housing associations to provide liquidity through individually tailored SLL’s.
Peabody is the first to use a Childcare metric while L&Q and Optivo were both linked to employment.
In recent years, the role of private finance in the sector has grown significantly and in the last 12 months has evolved to include, for the first time ever, structures linked to social purpose.