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£250 million for L&Q's 10,000 home development programme

Apr 10 2012

March was the month when L&Q returned to the bond markets to raise £250 million for our 10,000 home development programme.   It’s been two years since we last approached private investors and a lot had happened since then – the new affordable rent programme, welfare reform and the UK being placed on ‘negative watch’ by the rating agencies.

So what are international investors thinking about Affordable Housing UK?

Two years on we are dealing with a far more knowledgeable group of investors as quite a few housing associations have approached the capital markets recently; investors know our sector better and understand the risks we face collectively and individually.  They can differentiate between us, and that has a direct impact on the amount they are prepared to invest and the return they expect.

‘Driving efficiency and measured risks to improve our financial strength and invest in homes, services and communities’

Chief Executive David Montague 2011

For three days the L&Q team met with forty investors from around the world.  We promoted the power of housing associations; the power of social enterprise – driving efficiency and taking measured risks to improve our financial strength and invest in homes, services and communities.

We told them about the things which work for L&Q - sticking to what we do best and working with partners to do the rest; working in an area of strong demand; knowing our residents, our housing stock and our local authority partners; investing in our people; and simple corporate and governance structures which liberate our potential and unite everyone behind one social mission.

‘Housing associations have proven themselves to be creative, resilient, capable and passionate about our social mission’

We told them about a sector which, year on year, has reduced its operating costs, improved its margins, boosted its bottom line and increased borrowing to provide more affordable homes,  improved resident satisfaction and transformed communities.  There is always plenty more we can do, plenty that we can improve, but housing associations have proven themselves to be creative, resilient, capable and passionate about our social mission.

The result?  L&Q asked for £250 million.  We were offered £600 million.  And the cost?  A record breaking 4.62%.  For L&Q and its partners this means certainty.   We have the money behind us to deliver quality, affordability, security, places where people want to live.

If there was one issue which every investor wanted to discuss it was welfare reform – what was the impact on our financial plan?  How were we supporting our residents during transition?  Are our systems ready?  And what does it mean for housing over the longer term?  So if I have one tip for other housing associations who are preparing for the bond markets, it is to have the answer to these questions at your fingertips.

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