Debut £250m bond to create 2,800 homes

The company behind Glasgow Housing Association (GHA) has become the first organisation of its kind to tap into the bond market in a move aimed at creating some 2,800 affordable homes across central Scotland.

GHA's move is aimed at creating some 2,800 affordable homes across central Scotland. Picture: Getty
GHA's move is aimed at creating some 2,800 affordable homes across central Scotland. Picture: Getty

Wheatley Group, which also owns West Lothian Housing Partnership, today revealed it has raised £250 million through its over-subscribed bond issue, and said the offer period had been closed early due to “high demand”.

The “landmark” fundraising comes just days after Hearthstone Investments unveiled plans for a £150m fund to invest in more than 1,000 affordable, social and private rented homes. The fund manager, which specialises in residential property, has already secured £30m from Falkirk Council Pension Fund and is now in talks with other local authorities and government pension schemes.

Alastair Dempster, chairman of the Wheatley Group, said: “The phenomenal success of the bond issue will ultimately benefit thousands of tenants and families across central Scotland.

“This is a huge vote of confidence in the critical importance of the social ­housing sector in Scotland in creating and sustaining strong and vibrant communities.”

According to the Scottish Government, 465,000 new homes are needed to meet demand by 2035, and trade body Homes for Scotland last year asked the London School of Economics and Cambridge Centre for Housing & Planning Research to examine ways of boosting construction.

One key recommendation was to develop a prospectus to attract institutional money back into new rental housing, and the bond from Wheatley – which was designated AA- by ratings agency Standard & Poor’s earlier this year – is the first time that a Scottish housing association has raised finance through the issue of a public bond on the capital markets.

Wheatley chief executive Martin Armstrong said: “The successful launch of our bond will enable us to increase hugely the supply of high-quality, affordable housing.

“We will now press ahead with our plans to build thousands of much-needed new homes across central Scotland.”

The organisation has a housing stock of 46,000 units spanning 12 local authority areas, with more than 100,000 tenants and factored homeowners.

It also has a commercial property portfolio of almost 300 shops and offices, and Dunedin Canmore, a provider of social housing in Edinburgh, the Lothians and Fife, recently voted to join the group.

Lloyds Banking Group and Royal Bank of Scotland acted as joint book-runners for the bond, which pays 4.4 per cent and will mature in 2044.

Raj Jayaprakash, associate director at Lloyds Bank’s debt capital markets team, said: “This is a landmark bond, representing both the first public issue by a Scottish housing association and the first Scottish issuer to access the bond market after the independence referendum.”

RBS debt capital markets director David Mackay said: “The deal represents a fantastic result for all those involved in the transaction and has aided Wheatley to secure long-term financing that will support the growth and development of the organisation.”