Southern Housing Group has raised £300m through its first sustainability-linked bond.
The G15 group secured the 15-year bond at a coupon of 2.375 per cent and spread over gilts of 130 basis points, leading to all-in cost of funds of 2.497 per cent. The number of investors participating was not disclosed, but Southern said there was a “diverse range”.
The issuance is the first the 30,000-home landlord has secured under its new sustainable finance framework published last month. The group joins other major landlords in using investors’ growing appetite for ESG-linked investments to raise capital.
The funds will be used to help Southern meet its sustainability targets, which includes building new affordable and sustainable homes, retrofitting existing stock and a “range of community investment initiatives”, the group said.
It has a target of ensuring at least 75 per cent of its homes have an energy performance certificate rating (EPC) of C by March 2024.
A total of £50m of the bond is being retained.
Amanda Holgate, Southern’s chief financial officer, said: “We are delighted with the overwhelming appetite to invest in the organisation, which is both a recognition of our long-term financial strength and an endorsement of our commitment to providing high-quality affordable homes.”
Like many of its peers, Southern’s development plans were dented in the last financial year due to the pandemic. The group’s completions slid 78 per cent as it handed over 93 units. Overall, it is aiming to develop 7,000 homes over the next nine years.