Housing Australia executes its largest lending deal of $517 million and issues new sustainability bond to support delivery of 1,370 new homes in Melbourne
Housing Australia has signed its largest lending deal of approximately $517 million to support the delivery of 1,370 new homes in Melbourne under a partnership with Community Housing (Vic) Limited (CHL), the Victorian Government, and industry.
The Housing Australia funding will be primarily provided by a new sustainability bond issuance that closed yesterday. The 15-year bond is a fixed-rate note of $422 million, taking total issuance to over $2.6 billion.
There was strong interest in the AAA-rated, Government-guaranteed bond which was almost two times oversubscribed. A range of new and existing investors have taken up the opportunity to invest, including insurers, superannuation funds and international investors who recognise the project’s social and environmental characteristics.
The new homes that will be delivered under this deal comprise more than 650 social, 180 affordable, 470 market and 55 specialist disability accommodation, with the target cohort for the social and affordable components including women and children at risk of homelessness, and Indigenous Australians.
The Building Communities consortium, led by CHL and Tetris Capital, and including specialist providers Women’s Property Initiatives and Aboriginal Community Housing Vic Limited, will deliver the homes across four housing projects in South Yarra, Prahran, Hampton East and Port Melbourne as part of the Victorian Government’s Ground Lease Model 2 project (GLM2). Homes Victoria will lease the land to the consortium under an availability model to design, build, finance, manage and maintain the housing for 40 years, with the land remaining in Victorian Government ownership.
This is the second transaction Housing Australia has supported under the Victorian Government’s Ground Lease Model.
The Housing Australia funding for GLM2 comprises a loan facility of up to $422 million through the Affordable Housing Bond Aggregator (AHBA) and $95 million via the National Housing Infrastructure Facility (NHIF). The NHIF funding will enable critical infrastructure works including external stormwater drainage systems, replacement of external sewer lines, realignment of external power lines, remediation and road works.
The transaction will deliver ongoing value to CHL, that is expected to be invested in further social and affordable housing.
The loan takes Housing Australia’s funding to the community housing sector to nearly $4 billion, supporting more than 19,000 new and existing social and affordable homes.
Federal Minister for Housing Julie Collins said, “This is a historic day for housing in Australia, and another example of how the Albanese Labor Government is delivering on its commitments.
“We’re working every day to ensure that more Australians have a safe and affordable place to call home.”
Housing Australia CEO Nathan Dal Bon said, “At over half a billion dollars, this is our largest lending deal and we are delighted that the sustainability bond that is largely funding this project has attracted interest from investors including new superannuation funds.”
CHL Managing Director Steve Bevington said, “We have had a successful partnership with Housing Australia since its inception and most notably on the ground lease model project. Their ongoing commitment to funding large scale new social and affordable housing is commendable as it enables community housing providers such as CHL to provide much needed homes for hundreds of Victorians at an accelerated rate. With success, we hope that the model is replicable for the renewal of public housing nationally.”
Cbus Super Chief Investment Officer Brett Chatfield said, “Cbus Super is proud to be an early adopter of investment through Housing Australia in social and affordable housing and to be involved in this latest bond issuance. These investments are attractive for our fixed interest sector, while also providing a robust funding source for much needed social and affordable housing in Australia.”
Housing Australia acknowledges the contribution of joint lead managers, CBA, UBS and Westpac.
CBA Executive General Manager, Global Markets Chris McLachlan said, “CBA is incredibly proud to support Housing Australia with accessing institutional capital to advance this important work. We saw strong oversubscription that resulted in a granular order book, highlighting institutional investor support for Housing Australia and continued strength of Australia’s high-grade fixed income market, despite a backdrop of ongoing rates volatility and geopolitical risks.”
UBS Executive Director Nick Kalisperis said, “The strength of investor demand shows clear appetite to support social and sustainable housing within Australia. It is a testament of the hard work and determination by everyone at Housing Australia in fostering the investor base to what it is today.”