Developing association stops work on 5,700-home pipeline due to coronavirus despite raising £185m to fund new homes
Developing housing association Paragon Asra has paused work on its development sites and said its is temporarily halting new land acquisitions in response to the coronavirus.
The 23,000-home housing association, which has a target to build 5,700 homes in the decade to 2028 and over 1,000 homes in its current development pipeline, said it is “mothballing” development work as part of a suite of measures taken to overcome the government-imposed covid-19 lockdown.
The news came as the association – also known as PA Housing – announced it had successfully raised £185m from a consortium of four banks, with the money originally designed to fund the construction of new affordable homes.
The association, which operates in London, the Home Counties and the Midlands, said it had closed offices and moved to remote working, and was providing hardship funds for vulnerable tenants.
It said it was also undertaking the “mothballing of new development schemes on site and deferral of new site acquisitions.” Last financial year it built 400 homes.
It said it was in a strong financial position, with £40m of cash in the bank, £152m of additional available loan facilities, plus the additional £185m of loans just agreed, £35m of which is available immediately.
However, it said: “Payment of rent is the key risk to operating cash flows, and in the short term PA fully accepts that a number of residents are likely to face challenges in this respect.”
Two of PA Housing’s existing lenders – Barclays (£50m) and Santander (£25m) – and two new lenders – Sumitomo Mitsui Banking Corporation (£60m) and HSBC (£50m) – were behind the new loan facility.
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