Stonewater secures £100m in new funding after restructure

The 33,000-home landlord has borrowed £75 million from new partner SMBC and £25 million from its existing lender Nationwide.
Anne Costain, director of corporate finance at Stonewater.

The national social housing provider Stonewater has secured £100 million in new funding to help it deliver its planned 6,000 affordable homes over the next four years.

The 33,000-home landlord has borrowed £75 million from its new partner SMBC and an additional £25 million from its existing lender Nationwide following a restructure, which has seen it reduce its number of businesses from five to three.

The funding from SMBC is directly linked to Stonewater’s sustainability performance, offering the housing association a lower interest rate if it hits its targets relating to decarbonisation.

Stonewater’s annual environmental, social and corporate governance (ESG) targets include planting 3,000 trees, upgrading 350 of its homes to EPC level C or equivalent and installing 200 low-carbon heating systems.

Anne Costain, director of corporate finance at Stonewater, said: “All five registered providers divisions had assets and loans with a combination of lenders and this was good for flexibility at that time.

“However, we always knew that this would not remain the best structure due to its complexity. Also, some of the bank covenants and the conditions set by the individual banks we could borrow the money under were starting to restrict our potential. It was the right time to address this by restructuring and now allows us to present a clearer picture to investors and access funding more efficiently.

“We are really pleased to have worked with our advisers and partners to complete this process over the past six months. It is an important moment for Stonewater to agree our second ESG-linked loan, the first with SMBC. We are also very happy to be able to continue our long-standing relationship with Nationwide.”

Stonewater’s previous five-provider structure was a legacy of its formation in 2015 following the merger of Jephson and Raglan.

The housing association says its new approach will maximise its financial capacity to deliver its planned investment in existing and new homes.

In its recent In-Depth Assessment, the Regulation of Social Housing recognised the benefit of the new structure, reaffirming Stonewater’s G1 and V1 ratings for governance and financial viability.

John Bruton, executive director – finance at Stonewater, added: “This was the right time to restructure the Stonewater group and strengthen our financial capacity so we can begin working towards our future ambitions.

“We are very pleased to have been recognised for our sustainability commitments by SMBC and to have raised additional funding with Nationwide as a result of the restructure, providing us with further flexibility.”

A spokesperson from SMBC said: “SMBC is pleased to have worked on this environmental linked loan with Stonewater to support its ambitions of delivering more energy-efficient homes.”

Heidi Billington, head of property finance and public sector lending at Nationwide, said: “Nationwide were delighted to support Stonewater with its group restructuring and to work with them to modernise the Nationwide facility to support its plans for growth and delivery of new affordable homes.

“As part of the restructuring Nationwide were pleased to extend lending to Stonewater through the provision of a new £25 million revolving credit facility increasing total facilities to £91 million.”

Louise Leaver of law firm Bevan Brittan recently wrote for Housing Executive discussing how social housing providers can benefit from ESG investment.

Image: Anne Costain, director of corporate finance at Stonewater. Credit: Stonewater.

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