L&G pumps £70m into South east association

The investment arm of insurance giant L&G has agreed a £70m loan to South east housing association Saxon Weald to fund its low carbon housebuilding programme.

LGIM Real Assets signed a deal with Saxon Weald to provide it with sustainability-linked long-term finance from its corporate debt team.

Saxon Weald, which owns 6,750 homes across Sussex and Hampshire, built 85 homes last year and has previously set out plans to develop 500 homes over the next five years. As part of the deal, the housing association has committed to target all homes achieving a minimum EPC A rating

The deal means LGIM’s corporate debt team has now provided £400m of funding which is tied to delivery against environmental, sustainability and governance (ESG) criteria, much of which has gone to housing associations. The deal marks L&G’s latest foray into the housing sector, alongside its ownership of housebuilder Cala Homes, and its investment in setting up modular housing, build to rent, later living and affordable housing businesses.

LGIM said Saxon Weald will receive a discount on the loan price if it meets “ambitious” energy efficiency targets.

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Steve Bolton, head of corporate debt, Europe, LGIM Real Assets, said he was pleased to complete another significant investment which would help tackle the “stark, deep-rooted supply-demand imbalance when it comes to good quality, affordable housing in the UK”

He said: “This investment marks yet another example of inclusive capitalism at work, delivering a return to our pension holders whilst also benefitting our local communities.”

Michael Chinn, executive director, resources, Saxon Weald, said the funding formed a core part of delivering its sustainability strategy and continuing its objective of providing affordable homes. He said the structure of the funding was well-designed to “fit our aim to enhance the delivery of sustainable homes for our customers.”

Centrus acted as the sole arranger of the deal, while legal counsel was provided by Devonshires and Addleshaw Goddard.