IFM makes first move into social housing with $80m debt investment

The Australian fund manager has invested in A2Dominion on behalf of two insurance clients.

IFM Investors has made its first foray into affordable housing with a £60 million ($80.2 million; €68.4 million) debt investment in UK housing association A2Dominion.

The investment has been issued as a nine-year floating-rate note due in 2027 and is just the second FRN to be transacted in the UK housing sector.

IFM made the investment through its infrastructure debt team on behalf of two insurance clients from the UK and US who have global infrastructure debt investment mandates with the Australian fund manager. A spokeswoman for IFM declined to name the two clients for confidentiality reasons.

IFM’s investment director John Carey said in a statement that the fund manager had been looking for opportunities in the social housing sector, which he described as ‘resilient’, on behalf of clients who are seeking “stable, cash-generative assets that they can invest in and hold” and that A2Dominion met these criteria.

“A2Dominion presented an attractive investment for our clients, giving them access to floating-rate returns, appealing given the position in the interest rates cycle,” Carey said.

On the decision to work with IFM, A2Dominion’s executive director of finance and strategy Dean Tufts said: “We were particularly attracted to IFM Investors’ willingness to receive floating rates in order to balance our interest rate risk management strategy.”

A2Dominion owns and manages 37,000 properties in the UK with a focus on London and southern England, including social, affordable and private homes. It will use the debt funding to support its activities including the development of mixed-use housing to add to its existing social and affordable housing portfolio. The housing association’s arranged loan facilities now exceed £2 billion, the organisation said in a statement.

IFM has $105 billion of funds under management as at 31 March 2018, $41 billion of which represents infrastructure equity and debt investments.