Client stories

MORhomes showcases ESG credentials with Sustainability Bond

We’re thrilled to have been able to support MORhomes achieve another milestone for their business. This bond underlines yet again the pioneering role the social housing sector plays in the transition to sustainable business practices.

MORhomes – a unique borrowing vehicle for housing associations

MORhomes is a unique and innovative borrowing vehicle for the UK social housing sector, with its shares owned by 66 major not-for-profit UK housing associations. It raises finance on the bond markets and lends it on to its housing association shareholders.

The borrowing vehicle offers a number of benefits to its borrowers, such as immediate access to funds and the flexibility to borrow in amounts from £10 million upwards, saving housing associations the cost of having to borrow larger amounts, which might be more than is needed at any one time. So far, MORhomes has lent more than £492 million to its housing association shareholders, which in total manage over 900,000 properties with a range of tenures, including homes for social and affordable rent, for shared ownership and homes designed for people with support needs to be more independent.

MORhomes’ first issuance was an award-winning Social Bond[1] in February 2019. At the beginning of 2021, the lender established its Sustainable Bond Framework, which NatWest supported as the sole ESG Structuring Adviser. The Framework requires borrowers to undergo an innovative Sustainability Housing Assessment (SHA). The SHA examines a housing association’s environmental, social and governance (ESG) performance. It’s based on an 11-point multiple choice questionnaire, covering a range of indicators including the energy efficiency of existing and new stock, how housing associations are encouraging tenants to conserve more energy, and the installation of low carbon heating systems. Developed in-house and piloted with five housing associations, the assessments are independently validated by Ritterwald, a pan-European housing and real estate consultancy with a focus on sustainability.

MORhomes’ SHA is aligned with the Sustainability Reporting Standard (SRS) for Social Housing, a project on which NatWest was the sole bank sponsor. As an early adopter of this standard, MORhomes is encouraging its borrowers and shareholders to follow suit and report on their ESG performance transparently and consistently. While simple to complete, the SHA provides a meaningful assessment and extends the concept of the SRS by going beyond reporting and delivering an assessment that demonstrates how housing associations are actually performing on sustainability. Scoring well in the SHA will demonstrate that a housing association is going above and beyond current government requirements.

NatWest opens door to investors for MORhomes’ £18m Sustainability Bond

Seeking to issue its first Sustainability Bond under its Sustainable Bond Framework, MORhomes turned to is longstanding banking partner, NatWest, to help execute this debut issuance in the role as Sole Lead Manager.

MORhomes targeted a 30-year tenor for their bond to complement its existing maturity and to meet investor demand for longer-dated sustainable notes. Due to the relatively modest £18m MORhomes was looking to raise, the NatWest team advised to place the transaction privately. Hence, NatWest approached investors on a reverse enquiry basis, and following a number of conversations, MORhomes selected the preferred investor.  

Strong partnership successfully delivers milestones for MORhomes

George Flynn, NatWest, commented: “We’re delighted to have supported MORhomes with its Sustainable Bond Framework and its innovative Sustainable Housing Assessment at the beginning of the year, and we are excited about the successful outcome we achieved together for MORhomes’ first Sustainability Bond, both showing the housing association sector’s commitment to tackle the UK’s housing crisis as well as climate change. We’re delighted that we can actively contribute to social, economic and environmental progress in the UK by supporting this and many similar initiatives.”

Dr Arthur Krebbers, NatWest, added: “We’re thrilled to have been able to support MORhomes achieve another milestone for their business. This bond underlines yet again the pioneering role the social housing sector plays in the transition to sustainable business practices while also reflecting the trend of Housing Associations accessing sustainable capital markets financings, with the significant majority of sector issuance YTD being in Sustainability and/or social debt.”

Andrew Morton, Deputy Chief Executive Officer & Chief Financial Officer at MORhomes, stated: “We very much appreciated having the expertise of NatWest’s Sustainable Finance team in helping us develop our sector-leading Sustainable Bond Framework, and we also chose NatWest to help us take the new 30-year Sustainability Bond to market, which they placed swiftly and efficiently, giving Housing Associations another option for long-term funding through MORhomes.”

Patrick Symington, Chief Executive of MORhomes, said: “We are proud to have developed a genuinely unique approach to assessing the sustainability impact of our housing association borrowers. And we are now delighted to have found a borrower who meets our standards, going above and beyond current requirements and help meet the Government’s zero carbon target and the United Nations Sustainable Development Goals. From this initial issue we intend to build up the new 30-year sustainability bond alongside our existing 17-year social bond.”

[1] Environmental Finance Bond Awards 2020: Social Bond of the Year - Corporate


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