London, 15 December 2015
Macquarie Infrastructure Debt Investment Solutions (MIDIS) has arranged and financed an £80 million loan to the largest housing association in West Oxfordshire, Cottsway Housing Association (Cottsway). The debt facility will be drawn down in two tranches and will mature in 2055. In addition to the £80 million facility, MIDIS and Cottsway have signed an agreement whereby Cottsway can efficiently request to borrow an additional £50 million under substantially similar terms.
MIDIS has made 26 debt investments since 2012 and this marks its first into the regulated social housing sector. The sector was previously reliant on bank funding pre-financial crisis and is now looking to the institutional investor base to meet its long term funding requirements. The transaction is structured to give investors suitable protections whilst maintaining flexibility to allow Cottsway to manage their business with the freedom they require. The investment is secured against a portion of Cottsway’s 4,500 social housing properties.
MIDIS has been awarded mandates in excess of £3 billion and deployed over £1.3 billion into debt investments across 13 infrastructure subsectors since 2012. These include fixed, floating and inflation linked debt investments in transport, regulated utilities, social infrastructure, solar photovoltaic (PV), and wind.
Kit Hamilton, Managing Director of MIDIS said: “Investing in a regulated asset class like social housing provides our investors with the opportunity to de-risk and diversify their portfolios. With strong demand for social housing, we are pleased to provide our investors with a robust asset over the forty year term and provide Cottsway with a flexible debt funding solution.
“Underpinning our strategy to increase MIDIS’ investment in the social housing sector, we have hired Will Meers who, in his previous role, was responsible for advising many of the largest Housing Associations on their debt and derivative portfolios.”
Richard Reynolds, Cottsway said: “This transaction leaves Cottsway well placed to pursue our strategic objectives of meeting the significant excess demand for affordable housing in our region. We look forward to a long-term partnership with MIDIS who demonstrated a clear understanding of our needs in tailoring a solution, and whose capacity for delivering additional financing in future represented a compelling proposition.”
Robert St John, Partner at Centrus Advisors LLP which advised Cottsway on the financing said: “Having carefully considered the merits and implications of a listed bond issue and in the light of market conditions, a decision was taken to proceed with a private placement. Following meetings, arranged by Centrus, with a selected number of institutional investors, MIDIS was chosen as the preferred investor. We are delighted to have worked with both Cottsway and MIDIS to bring this financing to a successful conclusion.”