Aviva Investors completes new funding arrangement
Aviva Investors completes new funding arrangement for 307 homes in London and home counties
3 JUNE 2015
Aviva Investors, the global asset management business of Aviva plc (‘Aviva’), today announces a new funding arrangement by its REaLM (Returns Enhancing and Liability Matching) Social Housing Fund. The loan agreement with Genesis Housing Association (‘Genesis’) is secured on a portfolio of 307 residential properties in London and the Home Counties.
Developed with the borrower in mind as a cashflow-based financing, the transaction is backed almost entirely by a portfolio of shared ownership units. Genesis will keep all proceeds from the sale of further portions of shared ownership properties to the homeowners. This fully-amortising financing works much like a domestic repayment mortgage: combining the aspects of both a familiar loan format and a real estate-focused income security.
The funding proposition from Aviva Investors REaLM Social Housing Fund allows registered providers to unlock latent capacity within the retained equity of shared ownership properties, and raise long-term, institutional financing in manageable lot sizes, without any sales.
Martin Zdravkov, Fund Manager, REaLM Social Housing said:
“The flexibility of pension fund-backed investors is one of the best kept secrets in finance, when it does not have to be so. As a comprehensive funder with a long history of supporting affordable housing and registered providers, we offer the full array of financing alternatives, including tailor-made propositions such as this one.
“We are excited to support Genesis with this loan agreement and play our part in enabling the delivery of more affordable housing. This transaction shows the value of a collaborative approach which starts with the needs of the borrower.”
Elizabeth Frounde, Executive Director, Resources, Genesis Housing Association said:
“By just thinking a little more innovatively to tie the funding and interest to the rental stream of the property type, we have been able to maximise the available funding from a property tenure often seen as less attractive by mainstream lenders.
“Institutional Investors such as the Aviva Investors REaLM Social Housing Fund will represent more and more of a relationship our sector will embrace to fund our businesses going forward, as we are put under ever increasing pressure to simply deliver more homes from our own asset base.
“From doing a little bit of extra work, we have now developed a framework which matches cost to income stream, a very competitive cost of funds and a relationship with Aviva Investors REaLM Social Housing which can easily be replicated in the future.”
Aviva Investors were advised by Chaco Limited.
The Aviva Investors REaLM Social Housing Fund invests in high quality UK residential properties that are owned and managed by registered providers. It is a fully amortising financing solution with low initial yield and no refinancing risk.
The REaLM fund range was launched in 2011 to invest in specialist real estate and infrastructure related assets that provide very secure, long term, inflation linked cashflows. It aims to help institutional investors, particularly UK pension funds, address the challenges they face in matching liabilities and capturing long term income. The investments are structured to avoid the uncertain property reversion which is a risk of assets held in more traditional property funds.
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