Housing association to build 500 'energy efficient' homes thanks to £75 million funding package

A Scottish housing association is to ramp up its green credentials and build hundreds of energy efficient homes after securing £75 million in funding.

The private placement, with support from RBS parent NatWest, will allow Caledonia Housing Association to further its commitment to both building sustainable housing and becoming a carbon neutral organisation.

It intends to use the proceeds from the transaction to construct more than 500 energy efficient new homes. The transaction marks not only Caledonia’s first private placement but also its first source of sustainable funding.

Caledonia was supported by NatWest to raise the profile of the association in the market and generate interest from investors.

Leigh Grubb, director of finance and governance, Caledonia Housing Association, said: “Providing affordable and energy-efficient housing is central to our strategy, and the completion of this funding package is a significant milestone for Caledonia Housing Association. It provides an opportunity for investors to support our ongoing housing development programme as we continue to play a part in meeting the overwhelming need for high quality social housing in Scotland.

“This funding exercise also underlines the commitments the association has already made to its broader sustainability agenda and we are pleased to have the support of our new investors as we set out to deliver on our key goals.”

NatWest worked closely with the organisation to help develop a sustainable finance framework and acted as sole agent and sole structuring bank.

George Flynn, financing solutions, NatWest, added: “NatWest is proud to have enabled and supported Caledonia Housing Association in achieving its debut private placement. This has enabled Caledonia to develop strong and supportive investor relationships and a funding package that is closely aligned to their business plan requirements, achieving their core financing objectives.”

Caledonia intends to use the proceeds from the transaction to construct over 500 energy efficient new homes.

Caledonia is one of Scotland’s largest providers of affordable homes and associated services for people in housing need, owning and managing more than 5,600 social rented homes in eight local authority areas.

The association said that despite “challenging market conditions”, investors had offered 20-35 year maturities and a distinct framework of funding deferrals up to 44 months. This will allow it to draw down the funds in three tranches to meet its business plan funding requirements.