IFM Investors makes first UK affordable housing sector investment

IFM Investors has entered into the UK social and affordable housing sector with a £60m (€68.6m) investment.

The investor-owned fund manager has entered an agreement with residential property group A2Dominion and has issued the amount as a nine-year floating-rate note (FRN) due 2027.

IFM said the investment was made by its infrastructure debt team on behalf of two insurance clients from the UK and US, who have global infrastructure debt investment mandates with IFM Investors.

The loan is IFM’s first in the social and affordable housing sector and the second FRN to be transacted in the UK housing sector, the $105bn manager said. IFM, which is owned by 27 Australian pension funds, was set up more than 20 years ago.

A2Dominion, a housing association focused on developments in London and southern England, owns and manages 37,000 properties, including social, affordable and private homes.

The property group is expected to use the funding to support its activities including the development of mixed-use housing that adds to its social and affordable housing portfolio.

John Carey, an investment director at IFM Investors, said: “We have been looking at opportunities in the sector on behalf of our clients, who are looking for stable, cash-generative assets that they can invest in and hold.

“As a leader in social and affordable housing, governed by an experienced team of housing and construction experts, A2Dominion presented an attractive investment for our clients, giving them access to floating-rate returns, appealing given the position in the interest rates cycle.”

Dean Tufts, an executive director of finance and strategy at A2Dominion, said: “This landmark FRN transaction with IFM Investors underlines our strategy of diversifying our institutional investor relationships to support A2Dominion’s growth plans.

“We have now issued more than £600m of unsecured borrowing that can be deployed flexibly across the Group. We were particularly attracted to IFM Investors’ willingness to receive floating rates in order to balance our interest rate risk management strategy.”