Local Space has secured a £61 million private placement agreement with MetLife Investment Management as a first step to refinancing loans maturing during the next 4 to 5 years and maintain capacity to support its ongoing growth strategy.
The funding, which comes at a time when the numbers of people living within temporary accommodation in London are close to reaching record levels according to MHCLG figures, was secured against a portfolio of housing properties in East London. It comprises an initial drawdown of £40 million (£20m maturing May 2043 and £20m maturing May 2051) with the remaining £21 million (£10.5m maturing September 2044 and £10.5m maturing September 2052) deferred until September 2022.
As a result of this transaction, the weighted average maturity of Local Space’s debt has increased from 11 years to 13 years.
Local Space will also use some of the funding to invest in an asset management programme to enhance the quality and sustainability credentials of more than 800 of its homes, including replacement of kitchens, bathrooms, roofs, heating systems and other major improvements over the next few years.
Josie Parsons, Chief Executive at Local Space, commented: “At a time when the massive social and economic cost of the homelessness crisis is taking a huge toll on London, with some 60,080 households now homeless and living in temporary accommodation, we are pleased to have secured this agreement with MetLife Investment Management which enables us to continue to play our role to meeting this challenge. It is staggering to think that it is estimated there are now more homeless Londoners living in temporary accommodation than the entire population of a city like Oxford and we have an increasingly important role across the local communities we operate in through invested capital and supporting our tenants to live in a secure home.
“With many Boroughs concerned about a cliff edge end to the provision of emergency support to rough sleepers, we believe that there will be an even more important role for our organisation to play in addressing this impending homelessness crisis.”
Annette Bannister, Head of European Infrastructure at MetLife Investment Management, commented: “We’re pleased to work with Local Space in providing long-term safe and secure homes to homeless families at a particularly challenging time for the communities in which it operates. Our investment in Local Space underscores our continued support for the UK social housing sector in addressing a shortage of affordable housing across the country.”
Stephen Valvona, Director of US Private Placements, at Lloyds Bank Corporate Markets, commented: “Lloyds Bank is very pleased to have led this capital markets transaction for Local Space. The success of this transaction reflects the strong support from the market for the Local Space credit story and recognises the important role it plays in the East London community. The offering was well received by investors, allowing Local Space to increase the overall size of the deal and take advantage of a delay to funding, while still pricing at attractive all-in levels.”
The placement agent on the deal was Lloyds Securities Inc, legal advice was provided by Devonshires, and Treasury advice was provided by Chatham Financial.