Housing associations are facing significant challenges in the coming years. Not only is it agreed that 250,000 new homes in the social housing sector will be built by housing associations, but also 50,000 new homes in the mid-rental segment. While raising secured financing for the DAEB (Dutch: Diensten van Algemeen Economisch Belang or Services of General Economic Interest) is a familiar practice in the sector, raising unsecured financing remains an unknown and exciting route for many housing associations. However, this doesn’t have to be daunting or complicated at all, even when the financing comes from a foreign lender
Unsecured financing from abroad
Daan Reekers: “Financing for the non-DAEB (mid-rental) is often raised by housing associations from well-known Dutch banks such as BNG, Rabobank, or ABN Amro. They have the channels and connections for that. But why not explore financing options with the usual parties in the Netherlands further? We see that foreign banks, such as those from Germany, can offer comparable or better rates and conditions than Dutch entities. They provide similar covenants and loan documentation.”
Reekers continues: “But alternative financiers (which can also be Dutch entities) can offer interesting propositions as well, for example, by being able to finance a higher LTV (loan-to-value) or LTC (loan-to-cost). This means the housing association doesn’t have to put in as much of its own funds, allowing more projects to be carried out. Or they can finance where traditional lenders have less interest, such as in the case of purchasing a property with an energy label F or G.”
Adelaer also facilitates so-called mezzanine loans or Junior Loans. With a mezzanine loan, an additional loan is taken out on an existing loan, thereby increasing leverage. This comes with a higher risk profile for the lender, and consequently, the interest rates will be higher. If the existing lender is unwilling or unable to provide this mezzanine loan, we opt for a so-called Junior Loan (combining senior and mezzanine).
Risk migration as supported market research for lenders
Daan Reekers: “In my opinion, housing associations can gain a significant advantage, and in the context of risk migration, this is also a necessity. Indeed, when deploying their social funds, a well-founded investigation must be conducted into all available and relevant lenders at that time. The responsibility for this is entrusted to us by the housing association, and we oversee the market, ensuring that the best terms are obtained in their interest.”
Adelaer has a unique financing platform that helps real estate professionals find the best financing provider. On the platform, we bring together providers (lenders) and parties seeking financing (borrowers) for real estate. Currently, more than 2,000 financiers in Europe are connected to this platform, allowing us to always find the most suitable party.
Who is Adelaer Financial Architects?
Adelaer acts as a high-end debt broker in the creation of financing agreements between banks, insurers, pension funds, hedge funds, or other commercial real estate financing providers. Adelaer is an independent debt broker that prioritizes customer interests and places transparency in the process at the forefront. We specialize in creative financing solutions, including financing from traditional banks both domestically and internationally, as well as from insurers, pension funds, and investment funds.
Adelaer performs the following tasks for the client:
- Analyzing information and developing a financing structure
- Assessing the business case
- Drafting an information memorandum
- Establishing contact and presenting interested financiers
- Mediating and negotiating with interested financiers
- Guiding external advisors (legal, fiscal)
- Conducting loan management (using Adelaer’s proprietary software)
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