Genesis Housing has agreed a £44.3 million deal with Aviva Investors Realm Social Housing Fund regarding the former Assettrust shared ownership properties it purchased earlier this year.

Some 658 homes were placed in administration in late 2013 and 389 of these shared ownership and socially rented homes were bought by Genesis in January.

The organisation has now agreed a bespoke 40-year index-linked loan with Aviva, which should allow it to raise more debt per unit than would have been possible with a traditional asset value-based loan model.

Commenting on the deal, executive director of resources at Genesis Elizabeth Froude called the structure a "private placement loan" built around the cashflows of the shared ownership assets.

She compared the way it works to a domestic repayment mortgage, since it does not start to reduce the principal until the 15th year.

Speaking to Social Housing, Ms Froude said it is a simple and fairly low-risk structure that enables "far greater levels of liquidity from security".

This means that if it sells properties, it can "substitute another property to keep debt service levels at 60 per cent of the rent roll and we do not need to reduce the principal".

Ms Froude added that loan has been modelled to ensure Genesis is "left with quite a big proportion of the rent as Genesis income, so that still leaves us with management and other costs we might incur".

Louise Leaver, Head of Social Housing Finance at Winckworth Sherwood, who advised Genesis on the transaction, commented that it was a new approach to funding shared ownership assets, which allowed Genesis flexibility to manage the portfolio, whilst utilising to their full advantage properties that traditional lenders are often wary of.  

"The substitution arrangements were the subject of extensive negotiation to ensure that flexibility was retained for Genesis," she said.