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£35 million secured from Scottish Widows for 250 affordable homes

Birmingham-based social landlord The Pioneer Group has secured a £35 million long-term loan as part of its plans to build 250 new affordable homes by 2025.

The 30-year fixed rate loan has been agreed with Scottish Widows at an all-in interest rate of around 2.3%.  The funding is fully deferred for two years and will be drawn in October 2022.

Gavin Reid, Associate Director at Scottish Widows, commented:

We are delighted to have worked with the team at The Pioneer Group in structuring a long- term funding solution to meet its strategic objective of developing much needed affordable homes in the Midlands, whilst securing high quality cashflows aligned with our annuity liabilities.

This continued investment in the sector highlights our ongoing commitment to supporting core UK social infrastructure at a time when demand has never been more pressing.

Martyn Hencher, Finance Director of The Pioneer Group, added:

Affordable homes are in huge demand in Birmingham. Our new partnership with Scottish Widows means we can keep investing in our local communities.

We were keen to secure long term certainty over our interest costs, and take advantage of the very low rates available at the moment.

We were pleased with the response from potential funders, who took the time to understand our model and recognise our financial strengths. Scottish Widows was able to offer us funding at a very low interest rate deferred for two years – giving us the certainty we wanted but avoiding high holding costs.

Simon Wilson, Chief Executive of The Pioneer Group said:

This is great news for The Pioneer Group and for at least 250 new households when we get our next development programme underway. This new loan agreement fuels our commitment to expand our portfolio of homes in a sustainable way and to support local housing needs. Our vision is simple – to Make Lives and Communities Better with our current and future assets and our heritage of being a community-focused organisation.

Normal funding roadshows were not possible under coronavirus restrictions, so The Pioneer Group met with potential funders through Zoom video conferencing.

The latest funding follows The Pioneer Group being awarded £5 million social housing grant from Homes England, as part of its membership of the Matrix Housing Partnership consortium.

Savills Financial Consultants were the sole financial advisor to The Pioneer Group on the deal, while Bevan Brittan advised on the legal aspects.  Bruton Knowles conducted security valuations and Law Debenture are acting as Security Trustee.

Sean Escott, Director at Savills Financial Consultants, commented:

This is a great deal for The Pioneer Group.  It demonstrates that deferred structures like this are now available to smaller borrowers on very fine terms.

About The Pioneer Group

 The Pioneer Group is a partnership of people and organisations who have come together to deliver community regeneration and enable people and communities to be the best they can be. It provides around 2,500 homes in Birmingham, primarily in Castle Vale.

Its roots lie in the Castle Vale Housing Action Trust which transformed the estate in the 1990s and early noughties. Many of the approaches adopted to successful community regeneration by the Trust are still practiced by The Pioneer Group which has extended its offer into the wider North East Birmingham area. This funding will enable the Group to make its largest development investment since the regeneration.

About Scottish Widows Ltd

 Scottish Widows provides long-term loans across a range of sectors including Real Estate, Housing, Infrastructure and Higher Education. It offers a flexible approach to support its clients to fulfil their long-term ambitions from the provision of affordable housing to the delivery of renewable energy projects.

As part of Lloyds Banking Group, we work alongside our Commercial Banking colleagues who provide complementary products.