LGIM Real Assets (Legal & General) has provided £75 million in long-term financing to Bernicia, one of the largest providers of affordable homes across North East England. With over £1.5 billion invested in affordable housing to date, Legal & General’s £75 million investment in housing association Bernicia will support its ambitions to deliver 650 much needed homes to the region by 2023, better supporting the communities where they operate and playing an important role in the economic recovery of the North East.
13 Oct 2020
The coronavirus pandemic has underscored some of the major social issues that need to be addressed – not least income inequality, standards of living and access to healthcare. In a recent poll of more than 2,000 people for the Affordable Housing Commission, 13% of adults said their mental health was affected by their housing situation, this rose to 25% for those living in unaffordable housing – where their rent or mortgage equalled more than a third of their total household income.
As the UK population is set to grow by 3.6 million over the next ten years, there is an ever increasing burden being placed on the affordable housing sector. With 16,000 homes across their property portfolio, and a commitment to build 650 affordable homes in the next three years, Bernicia are playing an important role to help meet demand and provide safe housing to families for whom the private market is out of reach.
Centrus acted as sole financial advisor to Bernicia, while Trowers and Hamlins acted for Bernicia on the legal aspects underpinning the deal.
Steve Bolton, Head of Private Corporate Debt, Europe: "Whilst we have seen a lot of change over the past few months, the fundamental need for good quality, affordable homes has not changed. If Covid has shown us anything, it’s that we all need a safe place to call home. Covid, and the actions taken to mitigate its spread, highlight the central role of the home in people’s lives.
Legal & General is uniquely placed to invest annuity money into the UK economy, supporting its long-term pension commitments and creating real assets which provide jobs, housing, productivity and wage growth. This £75 million investment in Bernicia marks another significant milestone for Legal & General’s investment in the North East, having recently committed £100 million and £350 million to landmark regeneration projects in Sunderland and Newcastle respectively."
Janette Longstaff, Bernicia Executive Director of Finance: "This important investment from Legal & General Investment Management – as the sole investor in the deal - represents a huge vote of confidence in Bernicia’s financial strength as well as the wider North East economy.
It allows us to secure long-term funding at very favourable rates thanks to our strong financial standing and excellent governance.
The funds, which will be provided in three drawdowns over a two-year period, allow us to not only meet our corporate strategic objectives, but to go much further enabling us to explore strategic opportunities with our local authority partners, support local supply chains and create more opportunities for the people of the North East."
Sam Goldman, Director at Centrus: "We are delighted to support Bernicia on this landmark transaction, representing the fundamental strength of their business, long-term strategy and their position in and support for the North East.
The structure provides cost effective deferred funding, with flexible covenants, a foundation that further supports Bernicia in achieving its long-term strategy."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which a third is international. We also provide powerful asset origination capabilities. Together, these underpin our leading retirement and protection solutions: we are a leading international player in pension risk transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.
*at 31 Dec 2022
Legal & General Capital (LGC) is Legal & General Group’s alternative asset platform, creating assets for Legal & General Retirement and third-party clients in order to achieve improved risk-adjusted returns for our shareholders. LGC has built its capabilities in a range of alternative sectors, including in residential property; specialist commercial real estate; clean energy; alternative credit; and venture capital, which are all supported by long-term structural growth drivers, meet a financing gap and respond to a scarcity of supply that is underpinned by enduring societal needs.
Its purpose is to invest society’s capital for society’s benefit. Investing in the real economy and supporting the Group’s focus on climate and inclusive capitalism, LGC’s investments create jobs, change lives and contribute towards a net zero carbon future.
Legal & General has invested over £29bn in levelling-up regional economies, including through major UK-wide regeneration schemes and has recently made a commitment to enable all its new homes to operate at net zero carbon emissions from 2030.
*at 31 Jun 2021