Pension Insurance Corporation (PIC), a £16.6bn (€21.4bn) specialist insurer of defined benefit pension funds, has invested £40m in secured debt issued by mhs homes, a social housing provider based in Kent, south-eastern England.

The deal was done on a bilateral basis, with JC Rathbone Associates’ (JCRA) Social Housing team acting as arranger, and Altair Consultancy as adviser to mhs homes.

PIC said it has invested around £500m in social housing through bilateral deals to date. 

This fresh deal is PIC’s first with mhs, IPE Real Estate understands.

One of its latest deals prior to this was a £70m investment in bonds issued by The Church of England Pensions Board to finance the purchase of houses for retired clergy and their spouses.

The deal with mhs took the form of a private placement, with a maturity of 34 years to match PIC’s liabilities.

The debt is secured on social housing properties and will be drawn in two stages over the next two years.

The funding will help provide more than 400 new properties, according to PIC. 

Elizabeth Cain, debt origination analyst at PIC, said: “The transaction meets mhs homes’ need for flexible but fixed funding costs and also meets our need for very long-term, secured cashflows to match our liabilities.

“PIC continues to be an active lender to housing associations, and we expect to see more such deals as the sector responds to the recent regulatory changes.”

PIC’s first social housing deal was in 2012, when it bought a £50m bond issued by UK housing association Raglan, which later merged with Jephson to become Stonewater. 

The insurer tends to stick with bilateral transactions for smaller deals but has also participated in a consortium of investors that bought £220m of debt issued by Virgin Atlantic, secured against a portfolio of landing slots at London’s Heathrow Airport.

Elsewhere, it was recently announced that two BAE Systems pension funds are investing in UK affordable housing provider Rentplus, with their in-house manager having approved an initial £35m investment that may be followed by a further commitment of the same size.

In 2013, Lancashire County Pension Fund, a UK local government pension scheme, increased its investment in affordable-housing provider Heylo Housing from £180m to £300m.

The terms of the mhs private placement were not disclosed.