Client stories

Peabody to deliver energy efficient affordable housing

Make people’s lives better

As one of London’s oldest and largest not-for-profit housing providers, Peabody is investing for the long-term in communities across London and the South-East. Drawing on nearly 160 years of history, the Group is now responsible for around 67,000 homes with 155, 000 residents and 16,000 people who benefit from care and support services.

With sustainability a top priority for Peabody, the housing provider was at the forefront of establishing the Sustainability Reporting Standard for Social Housing in 2020 alongside others; and, at the beginning of this year was awarded the Certified Sustainable Housing Label by German consultancy, RITTERWALD. The label is an accreditation recognised by companies and investors across Europe and assesses performance against ESG metrics that are aligned with the United Nation’s Sustainable Development Goals (SDGs). Following a rigorous process, Peabody has been ranked as a “Frontrunner”, the highest possible rating, in all three of the ESG dimensions – Environmental, Social and Governance.

In addition, at the beginning of 2022, Peabody published its Sustainable Finance Framework, which received a Second Party Opinion from DNV confirming that the framework aligns with the relevant International Capital Markets (ICMA) and Loan Markets Association (LMA) principles. The Framework, which also aligns with the UN SDGs and – where relevant -  with the Sustainability Reporting Standards for Social Housing,  incorporates a range of ways in which Peabody is fulfilling its sustainability strategy: 1) Social projects: Affordable Housing, Access to Essential Services (such as children’s activities, sporting programmes, placemaking and improvement of green spaces) and Employment Generation; and 2) Green projects: Green Buildings, Energy Efficiency and Renewable Energy. 

Debut sustainability bond attracts orders in excess of £1 billion

After supporting Peabody on their Sustainable Finance Framework, in the role of Sole ESG Structuring Bank, NatWest was again the housing provider’s first choice when the company was looking to issue its inaugural Sustainability Bond under the new Framework. 

In the role of Active Bookrunner, Documentation and B&D agent, the NatWest team organised a two-day virtual roadshow to ensure that Peabody, who hadn’t issued a Sterling benchmark transaction since 2018, could present its credit and ESG story in detail to investors prior to its Sustainability Bond debut.    

Aligned with investor feedback, and to complement its existing maturity profile, Peabody announced a 12-year tenor for the bond. With orderbooks growing in excess of £1 billion, allowing for a significant tightening of the price, the company opted for a transaction size of £350m, while the coupon was set at 2.750%.

Peabody aims to allocate the majority of the bond proceeds to projects that will be delivered in the next two years - largely building affordable housing with an energy performance of EPC B and above. The company also committed to report on the impacts of its Sustainability Bond in an annual allocation report.

Putting sustainability at the heart of our future

Anthony Marriott, Director of Treasury & Corporate Finance at Peabody, said: “We are grateful to the NatWest team across all workstreams for their advice and expertise. Our work together includes collaborating on the inaugural Sustainability Reporting Standard for Social Housing, supporting our regular updates to investors, helping to establish Peabody’s Sustainable Finance Framework, and most recently securing a successful sustainability bond issuance. The interest from a wide range of investors reflects Peabody’s strong ESG credentials and, following this positive result, we look forward to continuing our work with NatWest going forward.”

George Flynn, Debt & Financing Solutions at NatWest, said: “We’re delighted to have supported Peabody with their debut Sustainability Bond after supporting our client on the construction of their Sustainable Finance Framework earlier in the year. Peabody has an exceptionally strong commitment to ESG, and we’re very pleased that this sustainability issuance not only attracted a very high number of orders but also a very diversified investor base. Our involvement in this transaction is another example of bringing NatWest’s purpose-led strategy to life - putting sustainability at the heart of our future.”

Tom Gidman, ESG Advisory at NatWest, added: “Peabody’s transaction is yet another example of the exceptionally fast growth in sustainability financing in the Housing sector, proving that the sector recognises the critical role it plays in delivering the government’s ambition for net zero carbon emissions by 2050 while also achieving positive social impact. We’re excited that we can actively contribute to social, economic and environmental progress in the UK through this and many similar transactions.”

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