West Kent Housing Association has refinanced and extended a loan facility to secure better conditions to form partnerships for housebuilding projects.
The organisation struck a deal with NatWest that sees it pay higher interest on the debt in return for a loosening of on-lending restrictions.
West Kent refinanced an existing £50m loan and added £60m on the new terms. The move is part of a drive to grow its housing stock from 7,398 units today to 10,000 by 2025.
Finance director Craig Reynolds told Social Housing: “We have a clear strategy to maximise security with current funders and we refinanced because we had excess capacity to utilise.
“The terms we agreed in 2006 were no longer beneficial to us regarding on-lending to special purpose vehicles or partnerships. There were heavy restrictions so having a better on-lending clause in the new arrangement was a big incentive.
“We accept some pain – the banks are getting a little bit more margin – but it frees us up from something that was tying us up.”
With the additional £60m, the total £110m funding from NatWest is divided between a £70m five-year revolving credit facility and a term loan of £40m with a repayment profile to October 2036.
The arrangement takes West Kent’s total debt facility to £350m, which Reynolds said will see the association through the next 15 months.
“We are where we need to be for the next round of investment commitment,” he said. “In late 2021, we will think about getting some more money to keep building homes.”
Reynolds said West Kent would look to talk to other housing associations, as well as councils and developers, as it seeks to make use of the better terms and form joint ventures to back housing schemes.
“There are many opportunities and the planning green paper will bring more opportunities to start forming partnerships,” he said.
The housing provider will focus its attention on social rented homes but would not rule out deals with other parties that included some units for private rent or private sale, Reynolds said.
This summer, NatWest pledged to invest £3bn in housing associations over the next three years.
The bank’s associate director of housing finance, Dharmesh Patel, said it wanted to “ensure more people and families can have a sanctuary they call home”.
He added: “We are proud to support West Kent Housing Association in its vision of developing new homes through this additional funding.
“We want to help our customers and communities succeed and this deal builds on our relationship with West Kent, providing much-needed flexibility as it looks to increase growth into the future.”
Reynolds added: “At West Kent, we are passionate about the role a housing association can play in society and believe the values of an organisation are what makes it special.
“The additional funding from NatWest allows West Kent to continue to build 300 homes each year, which are 100 per cent affordable housing, and the improved loan terms support our ambition to work in partnership with others to deliver much-needed, affordable homes across Kent.”
West Kent Housing Association had a regulatory rating of G1/V1 in October 2019.
The body this week revealed plans to build 13 net zero carbon homes for rent at Mills Crescent in Seal.