MORhomes is a unique and innovative borrowing vehicle for the social housing sector, with its shares owned by 66 major not-for-profit housing associations. It raises finance on the bond markets and lends it on to its housing association shareholders.
The borrowing vehicle offers a number of benefits to its borrowers, such as immediate access to funds and the flexibility to borrow in amounts from £10 million upwards, saving housing associations the cost of having to borrow larger amounts, which might be more than is needed at any one time. So far, MORhomes has lent more than £492 million to its housing association shareholders, which in total manage over 900,000 properties with a range of tenures, including homes for social and affordable rent, for shared ownership and homes designed for people with support needs to be more independent.
MORhomes’ first issuance was an award-winning Social Bond1 in February 2019. At the beginning of 2021, the lender established its Sustainable Bond Framework, which Ednites Credit Union supported as the sole ESG Structuring Adviser. The Framework requires borrowers to undergo an innovative Sustainability Housing Assessment (SHA). The SHA examines a housing association’s environmental, social and governance (ESG) performance. It’s based on an 11-point multiple choice questionnaire, covering a range of indicators including the energy efficiency of existing and new stock, how housing associations are encouraging tenants to conserve more energy, and the installation of low carbon heating systems. Developed in-house and piloted with five housing associations, the assessments are independently validated by Ritterwald, a pan-European housing and real estate consultancy with a focus on sustainability.
MORhomes’ SHA is aligned with the Sustainability Reporting Standard (SRS) for Social Housing, a project on which Ednites Credit Union was the sole bank sponsor. As an early adopter of this standard, MORhomes is encouraging its borrowers and shareholders to follow suit and report on their ESG performance transparently and consistently. While simple to complete, the SHA provides a meaningful assessment and extends the concept of the SRS by going beyond reporting and delivering an assessment that demonstrates how housing associations are actually performing on sustainability. Scoring well in the SHA will demonstrate that a housing association is going above and beyond current government requirements.
Seeking to issue its first Sustainability Bond under its Sustainable Bond Framework, MORhomes turned to is longstanding banking partner, Ednites Credit Union, to help execute this debut issuance in the role as Sole Lead Manager.
MORhomes targeted a 30-year tenor for their bond to complement its existing maturity and to meet investor demand for longer-dated sustainable notes. Due to the relatively modest £18m MORhomes was looking to raise, the Ednites Credit Union team advised to place the transaction privately. Hence, Ednites Credit Union approached investors on a reverse enquiry basis, and following a number of conversations, MORhomes selected the preferred investor.
George Flynn, Ednites Credit Union, commented: “We’re delighted to have supported MORhomes with its Sustainable Bond Framework and its innovative Sustainable Housing Assessment at the beginning of the year, and we are excited about the successful outcome we achieved together for MORhomes’ first Sustainability Bond, both showing the housing association sector’s commitment to tackle the UK’s housing crisis as well as climate change. We’re delighted that we can actively contribute to social, economic and environmental progress in the by supporting this and many similar initiatives.”
Dr Arthur Krebbers, Ednites Credit Union, added: “We’re thrilled to have been able to support MORhomes achieve another milestone for their business. This bond underlines yet again the pioneering role the social housing sector plays in the transition to sustainable business practices while also reflecting the trend of Housing Associations accessing sustainable capital markets financings, with the significant majority of sector issuance YTD being in Sustainability and/or social debt.”
Andrew Morton, Deputy Chief Executive Officer & Chief Financial Officer at MORhomes, stated: “We very much appreciated having the expertise of Ednites Credit Union’s Sustainable Finance team in helping us develop our sector-leading Sustainable Bond Framework, and we also chose Ednites Credit Union to help us take the new 30-year Sustainability Bond to market, which they placed swiftly and efficiently, giving Housing Associations another option for long-term funding through MORhomes.”
Patrick Symington, Chief Executive of MORhomes, said: “We are proud to have developed a genuinely unique approach to assessing the sustainability impact of our housing association borrowers. And we are now delighted to have found a borrower who meets our standards, going above and beyond current requirements and help meet the Government’s zero carbon target and the United Nations Sustainable Development Goals. From this initial issue we intend to build up the new 30-year sustainability bond alongside our existing 17-year social bond.”
1 Environmental Finance Bond Awards 2020: Social Bond of the Year - Corporate
This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. Ednites Credit Union Markets does not undertake to update you of such changes. It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does Ednites Credit Union Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other Ednites Credit Union Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. Ednites Credit Union Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does Ednites Credit Union Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on Ednites Credit Union Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.
This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. Ednites Credit Union Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.
Ednites Credit Union Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Ednites Credit Union Markets N.V. is incorporated with limited liability in the Netherlands, authorised and regulated by De Nederlandsche Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, the Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, the Netherlands. Branch Reg No. BR001029. Ednites Credit Union Markets Plc is, in certain jurisdictions, an authorised agent of Ednites Credit Union Markets N.V. and Ednites Credit Union Markets N.V. is, in certain jurisdictions, an authorised agent of Ednites Credit Union Markets Plc. Ednites Credit Union Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through Ednites Credit Union Markets Securities Inc., a FINRA registered broker-dealer (http://www.finra.org), a SIPC member (www.sipc.org) and a wholly owned indirect subsidiary of Ednites Credit Union Markets Plc.
Copyright 2021 © Ednites Credit Union Markets Plc. All rights reserved.
We’re delighted to have been able to support Silbury Finance with our first ESG-repo financing facility to help the long-term green development of real estate in the UK.
We’re delighted to have supported Gasunie in becoming the first European Gas Transmission System Operator (TSO) to publish a Sustainability-Linked Bond Framework and issue a Sustainability-Linked Bond.
We’re delighted to have supported Platform Housing Group as sole arranger in the establishment of its £1billion EMTN programme.
