Ground-Breaking Deal by Rettie & Co.’s Structured Finance Team
145 apartments at Sailmaker Place, Edinburgh, all with underground parking and let at affordable rents, were officially completed today. The £21.7m deal, arranged by Rettie & Co.’s structured finance team led by Nick Watson and Matthew Benson, achieves some key features that could provide the basis for future affordable housing programmes.
Rettie & Co. structured the deal to pre-place the long term interest in the properties with an Institutional Investor, in this case Hillcrest Housing Association, thus creating a direct ‘pass through’ of the interest in land to an end investor.
The deal creates an attractive medium-term yield to Hillcrest allowing them to offer much needed affordable rental accommodation whilst avoiding construction risk.
The structure offers an attractive template for future institutional investment in the Mid-Rent and Private Rented Sector in Scotland and a potential way to address the critical issues around the aggregation of a number of sites to create a sufficient scale to offer efficient investment opportunities for pension funds and other long term funding providers.
In addition to being the largest National Housing Trust project to date, the Project completed on time and on budget. Approximately 250 people were employed during the project and the construction process added circa. £54m to the Scottish Economy based on standard economic multipliers.
Commenting on the Deal, Nick Watson of Rettie & Co. said:
“Teague Homes made the site available to our Structured Finance team for this transaction. The deal could not have happened in this innovative and ground-breaking way without the immense commitment of Cruden Investments, RBS and Hart Builders who have delivered a fantastic product in a very tight timescale. The energy and imagination of Elaine Scott and the rest of the City of Edinburgh Council’s housing delivery team working with the Scottish Futures Trust were also vital.”
Rettie & Co.’s Matthew Benson observed that by using this approach blended yields in excess of 7% could be achieved for institutional investors. The deal also highlights the opportunity to create a co-operative style savings product for tenants to help them to build up a nest egg over the next 10 years that would enable them to buy their own property.
The Structured Finance team also announced the signing of a follow on deal involving Forth Ports Ltd, Cruden Investments and Hart Builders for a further 94 units worth £15m.
The team has also been involved in creating the original concepts for the National Housing Trust and have won the Saltire Award for innovation in housing finance.
For further information, please contact Nick Watson on 0131 624 9042 or email firstname.lastname@example.org.
Photograph shows from left to right:
Christine Gray – Manager, Scottish Futures Trust; Kevin Reid – Managing Director, Cruden Investment; Fiona Morrison – Deputy Chief Executive, Hillcrest Housing Association; Councillor Cammy Day; John Shepherd – Chairman, Northern Housing Co Ltd; Stuart Paterson – Chief Financial Officer, Forth Ports Ltd; Elaine Scott – Investment Manager, Strategy and Investment, City of Edinburgh Council; Margaret Burgess MSP – Minister for Housing and Welfare, Scottish Government; Angela Linton – Chief Executive, Hillcrest Housing Association; Matthew Benson – Director, Rettie & Co