Macquarie Asset Management, on behalf of Phoenix Group, one of the UK's largest long-term savings and retirement business, has provided £235 million of long-term financing to Westminster City Council ("WCC") to acquire more than 350 temporary accommodation properties within the borough of Westminster.
Purchased from the current owners A2Dominion, a not-for-profit regulated housing association, the portfolio of properties will enable WCC to continue to address homelessness and provide greater certainty for those awaiting longer-term housing solutions.
The inflation linked funding has a term of 42 years including an initial two-year rent-free period for WCC. As part of the terms of the funding, WCC will refurbish the properties to achieve a minimum EPC rating of 'C'. WCC will benefit from a guaranteed rent level throughout the funding term, as well as the option to own the properties at the end of the funding agreement.
Gareth Edwards, Senior Vice President at Macquarie Asset Management, said: "The City of Westminster faces a significant demand on temporary accommodation as it continues to address homelessness in the City. This transaction enables the transfer of a considerable number of properties from a leading social landlord to WCC, who has become the first London local authority to achieve the strongest customer rating of C1 from the social housing regulator. We are pleased to support WCC through this financing solution that will secure longer-term tenancies for vulnerable individuals in a cost-effective manner, and at the same time providing Phoenix with a long-term inflation linked stable cashflow."
Oliver Swallow, Senior Investment Manager at Phoenix Group, said: "Tackling systemic social issues like affordable housing is fundamental to our investment philosophy, as not only does it provide robust financial returns for our customers, but it also drives to the heart of our social purpose. This long-term low-cost Public Private financing initiative will provide stability to Westminster residents impacted by either unaffordable, unsuitable or unsafe housing, and grows our social and affording housing investment portfolio to £1.5 billion."
Gerald Almeroth, Executive Director of Finance Resources at Westminster City Council, said: "Like many Councils in London, Westminster is experiencing significant increases in homelessness demand and costs, this acquisition helps to protect much needed quality temporary accommodation supply within the City. This innovative financing structure will help the Council secure and improve these housing assets for the long-term benefit of our residents."
Macquarie Asset Management has provided approximately £1.4 billion of debt facilities to local authorities and housing associations in the United Kingdom on behalf of its institutional clients since 2015. In July 2023, Macquarie Asset Management, on behalf of Phoenix Group, provided a £58 million long-term financing package to enable Bromley Council to acquire more than 200 affordable homes. In April 2021, Macquarie Asset Management provided financing to Beehive Affordable Homes to acquire 50 affordable homes across the London borough of Bromley.
Macquarie Asset Management's Credit division is a global credit platform with approximately £171 billion assets under management. The platform offers focused expertise and solutions across the liquidity, risk and return spectrums, and has approximately £29 billion of private credit assets under management.1
About Phoenix Group
Phoenix Group is one of the UK's largest long-term savings and retirement businesses with £292 billion of assets under administration.
As life expectancy continues to increase and the pension landscape continues to shift, we offer our 12 million customers a broad range of pensions, savings and life insurance products across our family of brands which include Standard Life, SunLife, Phoenix Life and ReAssure. Our vision is to help even more people on their journey to and through retirement, providing the right support at the right time.
We are a growing and sustainable business united by a common purpose - helping people secure a life of possibilities. This drives everything we do and means taking responsible and sustainable investment decisions, and using our presence and voice to drive forward change for the better, for our customers, our colleagues, and our wider community.
A FTSE 100 company, we also feature in the FTSE100 ESG Select Index series and we are playing an active role in helping to invest in a sustainable future. As part of this, we have committed to our operations being net zero carbon by 2025 and for our investment portfolios we have set an interim target of a 50 per cent reduction in the carbon emission intensity of c£250bn by 2030, as we progress towards our portfolios being net zero carbon by 2050 or sooner.
We have been recognised as a leading employer for many years. We are accredited as a Living Wage Employer, Living Pension Employer and as a Carer Positive Exemplary Employer for offering the best support to colleagues who are carers.
