IFM Investors enters social housing to back A2Dominion with £60m private debt financing

The privately-financed investment, issued as a nine-year floating-rate note (FRN) due 2027, is IFM Investors’ first in the social and affordable housing sector and the second FRN to be transacted in the UK housing sector.

The investment was made by the firm’s infrastructure debt team on behalf of two insurance clients from the UK and US, who have global infrastructure debt investment mandates with IFM Investors. IFM Investors represents more than 15 million pension fund members globally and is one of the world’s largest infrastructure managers with $41bn globally in infrastructure equity and debt assets.

A2Dominion currently owns and manages 37,000 properties across the UK including social, affordable and private homes. It will use the latest funding to support its activities including the development of mixed-use housing that adds to its social and affordable housing portfolio.

As a result of the successful issue of the £60m FRNs to IFM Investors, A2Dominion’s arranged loan facilities now exceed £2bn having secured £150m across three separate loans from MUFG, BNP Paribas and HSBC earlier this month.

John Carey, IFM Investors investment director, said: “In our view, social housing has proved a resilient sector, underpinned by effective regulation. We have been looking at opportunities in the sector on behalf of our clients, who are looking for stable, cash-generative assets that they can invest in and hold. As a leader in social and affordable housing, governed by an experienced team of housing and construction experts, A2Dominion presented an attractive investment for our clients, giving them access to floating-rate returns, appealing given the position in the interest rates cycle.”

“A2Dominion plays an important role in UK housing, given its sustainable model of funding social and affordable housing through a combination of mixed use and private developments. Its social purpose aligns with our long-term, responsible investing principles, and those of our clients.”

Dean Tufts, executive director of finance and strategy at A2Dominion, added: “This landmark FRN transaction with IFM Investors underlines our strategy of diversifying our institutional investor relationships to support A2Dominion’s growth plans. The unsecured notes replicate the terms of our EMTN programme. We have now issued more than £600m of unsecured borrowing that can be deployed flexibly across the group. We were particularly attracted to IFM Investors’ willingness to receive floating rates in order to balance our interest rate risk management strategy.”