Hanover Scotland has secured £40million of funding in an innovative transaction for the social housing sector.

The funding, which links a revolving credit facility to a private placement, will be used to support the ongoing development plans of Hanover, which manages 5,000 properties on 200 developments across Scotland, with a particular focus on housing for older people.

Hanover’s business plan includes a goal of building at least 40 new units each year.

It has secured a five-year, £20m revolving credit facility (RCF) from Bank of Scotland, with whom it has had a relationship for almost 20 years.

At the same time, the housing association has also agreed a £20m private placement, funded by an institutional investor. This finance, which will be drawn down in 2018 and mature in 2048, will be used to repay the RCF, which will itself be adjusted to £5m in 2018.

The structure of the facility is the first of its kind in the social housing sector as the RCF and private placement share the same security and offer a flexible finance package.

Marc Ward, relationship manager in the social housing team at Bank of Scotland, said: “This is a tailored, innovative solution which meets the long-term funding needs of Hanover Scotland while also providing short-term liquidity to support its development goals.”