MUFG has closed a £75m Revolving Credit Facility (RCF) and private placement with Sanctuary Group and BAE Systems Pension Fund. The facility will provide the housing association with the liquidity to pursue a large-scale development programme to build 30,000 homes over the next decade.
MUFG acted as Mandated Lead Arranger on the 3-year facility, which will be followed by a take-out from institutional investor BAE Systems Pension Fund in the form of a £75m private placement note.
This is MUFG's second deal in the housing finance sector to incorporate institutional funding for social housing, following a similar £50m RCF that was closed with Network Homes in May. The structure of these facilities enables housing associations to gain short-term, flexible funding whilst meeting their long-term funding requirements.
Sanjay Narbheram, MUFG's Director of Housing Finance in EMEA, stated:
"We at MUFG are very pleased to be working with Sanctuary, and this funding solution is a great way to commence our relationship. Since designing this RCF structure we have seen healthy demand from housing associations. It is our belief that this solution-based model could transform the funding landscape for social housing, because associations are increasingly telling us that they need the benefits of both short-term flexibility and long-term funding commitments."
Tony King, Group Treasurer for Sanctuary Group, stated:
"Sanctuary is delighted to conclude its first funding arrangement with MUFG and as part of this, further develop its existing relationship with BAE Systems Pension Fund. The structure allows for the flexibility of a RCF from MUFG but with the certainty of long-term funding when it matures, at pre-agreed rates from BAE Systems Pension Fund. Incorporating it within Sanctuary's existing Group treasury structure makes it efficient in terms of our operations and security, and it will assist in funding the Group's ambitious development programme to build over 30,000 new homes in England and Scotland by 2027."
Jon-Paul Phillips, Portfolio Manager, BAE Systems Pension Funds Investment Management, stated:
“Given the sector leading quality of the organisation, we are delighted to be entering into a long-term relationship with Sanctuary through this private placement transaction. It is very pleasing to agree a non-standard structure that suits Sanctuary's business plan, our long-term lending requirements as well as refinancing certainty for MUFG's facility."
This latest deal now takes MUFG's commitments to the housing sector up to £705m. It is the eleventh social housing transaction the team has completed.