Muckle LLP works with Home Group to secure multi-million pound loans

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We are pleased to announce we have helped one of the UK’s largest affordable housing providers secure a series of loans worth more than £100m.

Significant transactions

We have been appointed by Home Group to assist with three significant financial transactions in the last year, which will deliver hundreds of new affordable homes and fund improvements to current housing stock.

The three deals, which were finalised between December and September, included Government-backed funding of £20m at historically low rates believed to the lowest ever achieved in the sector’s 26-year history of accessing private finance.

This recent work has further strengthened our long-standing relationship with Home Group, which has 55,000 homes throughout the UK.

Long-standing relationship

The not-for-profit housing provider, which is based in Gosforth, has instructed our firm for a number of years.  We assist Home Group’s in-house legal team in key areas such as property development and corporate and commercial work which included Home Group’s recent £20m IT procurement contract.

Home Group’s commitment to improving energy efficiency in homes for existing customers was bolstered in December last year when we completed documents related to a £44.5m loan from The Housing Finance Corporation – funded by the Department for Communities and Local Government and the European Investment Bank.

First-of-its-kind bond deal

In May this year, we also played a key role in advising Home Group on a first-of-its-kind deal which enabled Home Group to access low interest funding from an ‘AAA’ rated £208m bond.

Home Group was one of just 13 housing providers selected by Affordable Housing Finance Plc to access the funds.  Home Group and its Home Scotland subsidiary secured the biggest slice of the Government-backed funding with £30.7m at what is thought to be some of the lowest rates ever in the sector.

We advised on the English side of the deal – which equated to £20m. However, our team also had to work closely with the Scottish lawyers with Louise Duffy, our Head of Banking and Restructuring, leading the way throughout the process.

The loan will be used to supplement Home Group’s development programme, which is already one of the largest in the sector, aimed at building modern energy efficient homes for those who need them.

In a related investment project, we advised on a further loan of £41m from Affordable Housing Finance Plc in September for new stock. This loan was also backed through the European Investment Bank and had a Government-backed guarantee.

Will McKay, Partner in the Real Estate team, said: “The finance deals we have overseen in the last year have been significant both in terms of Home Group’s development programme and for us as a law firm as we have been able to work in some ground-breaking areas. The bond deal was the first time this mechanism has been used to fund social housing in the UK and we’re proud to have played such a pivotal role.”

The nature of the bond deal meant the team at Muckle LLP were working to tight timescales dictated by the complexities that came with 13 different registered providers working towards a shared timetable.

Louise Duffy, Partner and Head of Banking and Restructuring, added: “The structure of the bond deal was quite novel as the interest rate was very low and, although we were working individually with Home Group, we also had to be aware of the overarching group made up of 12 other housing providers who were all locked into the same tight timescales.

“There was a substantial amount of work to be done in a relatively short time to ensure conditions were satisfied before the money could be accessed but the team at Muckle LLP worked hard to make it a smooth and problem-free process.”

Austin Woods, Home Group director of legal, said: “As a not-for-profit housing provider it’s important to us that we can access funds at the best rates to help us provide the affordable homes so desperately needed in the UK.

“Amanda Rickerby, our senior funding and general property lawyer worked tirelessly alongside our treasury manager Julie Hetherington to secure this funding. The low terms of the loans reflect the differing funding bodies’ financial confidence in Home Group which has an A+ credit rating and a healthy surplus which we re-invest in our social mission.”

For more information, help or advice please contact Russell Hall on 0191 211 7960.