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The twenty-nine housing associations that borrow via THFC’s bLEND medium-term note vehicle have disclosed their environmental, social and governance (ESG) performance for the last financial year to £8bn mutual lender The Housing Finance Corporation (THFC).

The publication of THFC’s ‘Funding Housing, Making Impact 2022’ report marks the second year that the sector’s leading aggregator to the social housing sector has asked its housing association borrowers to submit their ESG disclosures in accordance with the Sustainability Reporting Standard for Social Housing (SRS).

The responses show that bLEND borrowers delivered almost 5,500 home in the period, the vast majority of which were for social housing. Their overall average rent was 61% of private rent levels during the year, and almost two thirds of homes were at EPC C or above.

THFC was an early adopter and supporter of the SRS, and became the first sector funder to require borrowers to report against the standard. The SRS has become the go-to reporting framework for housing associations since it was launched in late 2020 to help the sector provide comparable, consistent and transparent ESG disclosures to financial and other stakeholders.

The last year has seen ESG and sustainability reporting move further into the mainstream, with investors and banks alike now required to disclose their own data against frameworks such as the Taskforce for Climate-related Financial Disclosures (TCFD), resulting in increased requests for disclosures from sectors like housing.

Piers Williamson, chief executive of THFC and bLEND, said: “Our SRS report marks another important step on the road to greater transparency, accountability and ultimately, sustainability, for our bLEND borrowers. Hats off to all of these housing associations, who despite the very many pressures bearing down on them, recognize the value of ESG reporting.

“Underpinning sustainable investment is the need for good data and clear reporting. While the suitability of the sector for ESG and sustainability-linked funding is self-evident, it’s crucial that both tenants and funders are able to see and understand performance.”

For the 21/22 reporting period, bLEND had 27 borrowers – an increase of 11 borrowers on the same period in 2020/21. bLEND’s lending increased £450m in the year to £1.4bn, with a weighted cost of funds including deferral premia, on all issuance to 31/03/22 of 2.57%.

At the time of publication, this had increased further to 29 borrowers, owning and managing nearly 330,000 homes across the UK and responsible for delivering 5,440 in the 2021/22 financial year.

All funds are managed through a social bond framework, with £75m lent to Midlands housing provider GreenSquareAccord within a sustainable bond framework. Reporting against these frameworks has also been included in the latest publication.

The SRS disclosures provide a wealth of information that will be of relevance to a range of HA stakeholders, while also providing the opportunity to tell resident and community stories.

It enables HAs to report across 12 themes and 48 core and enhanced criteria and is linked to seven core UN Sustainable Development Goals.

The data from bLEND’s latest report shows that:

bLEND borrowers delivered 5,440 new homes in total in the financial year, of which 22% were social rent, 43% affordable rent and 25% shared ownership
Average rent compared with private rented levels was 61%
64% of homes have at least a 3-year fixed tenancy
63% of EPC ratings on existing homes were at EPC C or above
100% of homes are at the Decent Homes Standard
Average scope emissions (1, 2, 3) in KgCO2e per unit: 2,203.68
Total Scope 1 & 2 emissions of bLEND borrowers was 54,433 tonnes CO2e
Median gender pay gap of 6% across all borrowers
43% of board members are women
13% of board members are black and ethnic minority
100% have a compliant regulatory rating

Mr. Williamson added: “Given the economic and political turmoil the sector faces – along with ongoing reputational problems – these disclosures are a valuable way to demonstrate what the sector is all about, its commitment to purpose, the progress it is making and where it can focus even more.”

Note to editors:

About THFC: The Housing Finance Corporation (THFC) is the UK’s leading affordable housing aggregator, with £8.3bn of lending to around 161 housing associations in England, Wales, Northern Ireland and Scotland. THFC was set up in 1987 in partnership with the National Housing Federation and what was the Housing Corporation. It now also operates through its subsidiary company, bLEND, which was established in 2018. As a not-for-profit, the group’s surpluses are retained and reinvested to ensure THFC can continue to provide competitively priced funding for HAs long into the future.
THFC’s track record of innovation includes some of the earliest green finance products for retrofit and sustainable developments.

THFC Insights: THFC will be releasing further insights on the SRS disclosures via its intelligence hub, THFC Insights.

For further information contact: Arun Poobalasingam: Arun.Poobalasingam@thfcorp.com

bLEND has today returned to market with the issue of a new bond series to raise funds for three new borrowers.

bLEND was the first social housing issuer to return to the markets today, after a temporary shutdown caused by Russia’s invasion of Ukraine.

bLEND has today completed its first charging exercise involving homes being built using modern methods of construction

bLEND is converting an existing bond into a sustainable issue in what marks a first for the UK housing sector.

bLEND has today come to market with a £55m tap of its 2054 bond for two new borrowers.

bLEND has today become the first investor to disclose the performance of its borowers…

bLEND has expanded into the Northern Irish social housing sector as part of an £85m double-tranche transaction for two new borrowers today…

bLEND today issued its first 40-year bond, raising £75m at an all-in rate of 2.467% for a newly-merged housing association.

The transaction priced at a spread of +128 over Gilts after tightening significantly thanks to healthy investor interest, but also reflecting a new issue premium for the new, longer-dated bond series.

Proceeds of today’s issue will go to GreenSquareAccord, which completed its merger in April and now owns and manages around 25,000 homes from Newcastle to Salisbury.

The transaction – the latest new series to be done under bLEND’s Social Bond Framework – completed against the backdrop of rising concerns over inflation amid the ongoing recovery from the global pandemic. The ability to lock in long-term funding and low rates through bLEND allows housing associations to mitigate and manage that risk.

Today’s issuance gives bLEND a range of maturities from 2034 to 2061. Building this maturity curve is a central plank of the bLEND model and with four different maturities available, provides flexibility and choice to borrowers. The deal also marks the first forty-year loan from THFC, bLEND’s not-for-profit parent company, since 1987, when it issued the very first forty-year deal – a deep discount bond at an effective yield of 10.786%.

bLEND’s CEO, Piers Williamson, said: “One of the great features about bLEND is the flexibility it affords borrowers without compromise on price. Given the resurgence of inflation as a risk factor, the ability to lock in a 2.467% cost of funds for forty years is a big deal and allows our borrowers to look to the future with confidence as they focus on the huge challenge of becoming net zero carbon by 2050.”

With the all-in cost of funds below 2.467%, bLEND has once again demonstrated the consistency which has contributed to its success, despite the relatively small size of the new series and the general preference among investors for the thirty-year maturity over longer paper. bLEND’s total issuance recently passed £1bn, marking it out as a significant funder to the social housing sector. In 2021 alone it has lent £270m to five new housing association borrowers.

GreenSquareAccord came about through a merger of equals with a view to forming a housing and care provider with greater capability and capacity to deliver enhanced, locally focused services to customers, while innovating and responding to the challenges of the future.

Stuart Fisher, CFO & Deputy CEO at GreenSquareAccord, said “We are delighted to have secured a long-term funding package through bLEND that will help deliver our growth aspirations and fulfil our merger promises. This funding will help us deliver our commitment to develop 1,000 new affordable homes a year for some of the most vulnerable people in society. GreenSquareAccord will continue to develop and deliver high-quality services that meet the needs of our existing customers and the communities in which we serve.”

Mr Williamson added: “We’re delighted in particular to be working with GreenSquareAccord.  They exemplify the sector’s growing record of innovation as well as providing homes that are not just affordable but also sustainable.”

bLEND has returned to market a week after the launch of its Social Bond Framework with a £35m tap of its 2054 maturity at its lowest ever credit spread.

The spread over Gilts on today’s transaction was +108bps, producing an all-in rate of 2.45%, despite choppy market conditions after this week’s CPI announcements from the USA.

It brings bLEND’s total issuance over the 2.5 years since it was founded to more than £1bn. The original business strategy targeted £1bn over 5 years, and the speed with which this was achieved reflects the diversity of the appeal of the innovative medium-term note (MTN) structure.
The deal also marks the funder’s first social bond issuance.

An initial £25m was priced on Friday for Valleys to Coast, a housing association managing over 5,800 homes across Bridgend, South Wales. The remaining £10m is intended to be priced on a deferred basis.

bLEND attributes the tight spread to the strong investor interest after the aggregator – which is run by The Housing Finance Corporation (THFC) – converted all £1Bn of its issuance to date to social bonds, with today’s issuance being the first ‘new’ social paper.

This conversion allowed bLEND to reach a spread 5bps inside the secondary market, representing a negative new issue premium. bLEND’s total issuance is now £1,023,000, of which £195m has been issued in 2021 alone.
Valleys to Coast will use the funding to refinance existing debt, help maintain its strong financial profile and continue to provide a high-quality, local service.

Claire Marshall, Corporate Director of Finance, Governance, Strategy and Performance at Valleys to Coast, said “Our purpose is to provide homes and places where people feel safe and happy. Today’s funding through bLEND is a core part of helping us to achieve this vision.

“As the conversation turns to how the country emerges from the pandemic, the role of housing associations will be more important than ever, and we are well placed to meet the need for truly affordable housing.
“Securing this low-cost, long-term funding through bLEND will help us to meet our ambitious 10-year corporate plan objectives and to maximise our investment in our homes and communities.”

The deal comes at the end of a week which, despite the market volatility, has seen two further successful HA Bond Issues: for Beyond Housing and Paradigm.

bLEND’s CEO, Piers Williamson, said “It’s fantastic to see bLEND reach £1bn in half of the time originally planned, and it reflects both the design of bLEND’s model which gives housing associations flexibility without compromise on price, and the hard work of everyone in the bLEND team.

“We’ve now converted all bLEND bonds into Social bonds, reinforcing the focus on social impact which sits at the heart of bLEND. It’s great to see the positive response from the sector, but too the knock on effect on pricing, which enables us to secure a great rate for associations like Valleys to Coast, who do such important work for their communities.”