South Lakes Housing – New Funding

South Lakes Housing is the largest provider of affordable rented housing in South Lakeland, Cumbria.

Objective

We were appointed to support South Lakes Housing in securing additional borrowing to fund ongoing investment in its homes and to continue the development of much-needed affordable housing.

What we did

As South Lakes Housing’s retained treasury advisors, DTP supported the Director of Finance and Head of Financial Planning and Treasury in developing a targeted approach to potential funders. This was designed to meet a £30m borrowing requirement, improve the covenant position and ensure an appropriate mix of borrowing to manage both refinance and interest rate risk.

DTP worked closely with the Director of Finance, Head of Financial Planning and Treasury and the Funding Panel to agree an approach to hedging variable interest rate exposure and managing interest rate risk.

We also modelled a range of drawdown and prepayment options to ensure South Lakes Housing could make informed decisions on when to draw down new facilities and how to hedge interest rate exposure.

What we achieved

South Lakes Housing successfully arranged £40m of new loan facilities, comprising a mix of long-term funding from NatWest, an existing lender, and a shorter-term revolving credit facility from Danske Bank, a new lender.

The new funding met all objectives set at the outset, providing a balanced mix of facilities, competitive pricing, an improved covenant position and effective management of interest rate risk.

The agreed approach to hedging and drawdown strategy meant South Lakes Housing was well positioned immediately following completion to draw from the new long-term facility, prepay higher-margin loans and fix interest rates at a favourable point in the market, prior to the onset of armed conflict in the Gulf.