PIC invests £80 million in North Star Housing Group

London, 8 December 2020 – Pension Insurance Corporation plc (“PIC”), a specialist insurer of defined benefit pension funds, has completed an £80 million debt investment in North Star Housing Group (“North Star”), a housing association based in the North East of England. The funds will help North Star complete a refinancing and restructuring exercise, as well as deliver 600 new social and affordable homes over the next eight years.

The funds will provide North Star with a robust long-term financial platform from which to deliver its vision for the future. PIC was attracted by North Star’s strong social purpose which is focused on creating stable, secure, trusting and supportive environments for its residents. 

North Star provides affordable housing, invests in its communities and develops new homes across the Tees Valley, North Yorkshire and County Durham. It currently owns and manages just under 4,000 homes in an area where demand for housing far exceeds supply.

Key points of the transaction:

• £80 million total investment split into two tranches, both maturing in 2060    
  • £70 million spot funding
  • £10 million deferred funding, drawn down in 2022

• Maturity profile has been tailored to match PIC’s pension liabilities in years where it is difficult to source cashflows in the public bond markets
• The investment will be used to refinance North Star’s existing bank facilities, build 600 new homes and improve the energy performance of its existing stock portfolio
• The funds are secured on a portfolio of social housing properties

James Walder, Executive Director of Finance & Business Support at North Star Housing Group, said: “The completion of the treasury and group restructure is an important milestone for North Star Housing Group. We have a clear strategy to both invest in our existing assets and develop new homes. Delivering on our treasury strategy in these highly uncertain times has been a real achievement for North Star Housing Group and we look forward to delivering our ambitious plans for the future. We would like to thank our advisers Centrus and Trowers & Hamlins for their expertise, advice and support on this project. In addition, I want to thank our lenders for their help in structuring this transaction which will allow to us deliver our ambitious plans to develop hundreds of new homes to meet demand for social properties.”

Eugenia Korobova, Debt Origination Manager at PIC, said: “We are delighted to have worked with North Star on this investment, which marks a significant milestone in the Group’s strategy. We were impressed by their approach to risk management and their commitment to the communities they serve.

“PIC’s funding in North Star, allowing it to develop hundreds of new homes, and in the housing association sector more generally, plays an important part in backing the pensions of our policyholders as we look for secure and reliable income streams over the long-term. The pension risk transfer market is expected to play an increasingly important role funding social housing over the coming decade as we take on more pension liabilities.”

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Notes to Editors:

For further information please contact:

Pension Insurance Corporation     
Jeremy Apfel                         
+44 (0)20 7105 2140

apfel@pensioncorporation.com

About Pension Insurance Corporation
The purpose of Pension Insurance Corporation (“PIC”) plc is to pay the pensions of its current and future policyholders. PIC provides secure and stable retirement incomes through leading customer service, comprehensive risk management and excellence in asset and liability management. At half-year 2020, PIC had insured 237,600 pension scheme members and had £47.7 billion in financial investments, accumulated through the provision of tailored pension insurance buyouts and buy-ins to the trustees and sponsors of U.K. defined benefit pension schemes. Clients include FTSE 100 companies, multinationals and the public sector. PIC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority (FRN 454345). For further information please visitwww.pensioncorporation.com