PGIM reaffirms Fizzy relationship

Fizzy Living, the private rental arm of Thames Valley Housing (TVH), has expanded its relationship with the US investment giant PGIM Real Estate, part of the global investment management business of Prudential Financial Inc., with a loan facility worth £53.5m.

This is an extension of the existing £32.4m PGIM arrangement for Fizzy which completed in January 2015, and will refinance existing investor-provided senior debt at two new Fizzy sites in Lewisham, South East London. 

Fizzy’s approach with the new refinancing was to take advantage of the low interest rate environment and to lock in certainty in the run up to Brexit and beyond. PGIM’s willingness to extend their partnership with Fizzy underlines the success of the Fizzy business model to date and confidence in its future performance.

Fizzy also receives capital funding from the Abu Dhabi Investment Authority (ADIA). Since January 2015 they have committed a further £200m, bringing their total investment to £400m.

Rita Akushie, TVH’s Group Finance Director said “Attracting keenly priced third party senior debt is a key element to increasing investment returns. From a PGIM perspective, the Fizzy portfolio is attractive as the assets are proven to generate cash sufficient to cover interest payments, and the loan to value is low (the Fizzy portfolio value has increased 36% since ADIA invested). From a Fizzy perspective, the low financing cost increases investor returns and the covenant headroom provides comfort that Fizzy can withstand market fluctuations without risking a breach of those covenants.

It is great that PGIM has demonstrated their confidence in Fizzy’s business model for a second time. The extension of the loan facility to our new assets underlines their confidence in our ability to deliver excellent operational efficiency. Fizzy is a very strong competitor in the sector due its delivery rate of actual let units, and profitability. Our success is down to being very clear about our product and sticking to the investment parameters.”

Fizzy Lewisham comprises two 68 flat blocks adjacent to the DLR and Underground stations. The first block handed over in the week following the Brexit vote in June 2016, and experienced the fastest lease-up to date for a Fizzy building, reaching 95% occupancy in just four months. The second Lewisham block is due to hand over in September 2017 and is expected to be 95% occupied by March 2018. The senior debt provided by PGIM will be drawn in two tranches: £9.8m in May 2017 for the first block and £11.3m in May 2018 for the second block.

Aaron Knight, Director, PGIM Real Estate Finance said “On a global basis, PGIM Real Estate Finance have been a long supporter of the PRS/ Multi-family product. In building our lending platform in the UK, we quickly determined that Fizzy Living were at the forefront of the industry and a business that we wanted to support. Financing the two Lewisham assets is a further extension of that relationship, which we hope to continue as the Fizzy development pipeline comes to fruition”

Editors notes

Notes to Editors

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Fizzy is owned by Thames Valley Housing (TVH) and Silver Arrow.  Fizzy has received an initial capital commitment of up to £400m from Silver Arrow, an investment entity owned by Abu Dhabi Investment Authority (ADIA), in addition to existing capital from TVH.

Secure rental income streams make the project very attractive to developer and bank investors. Developers will have the opportunity to invest into the scheme through offering rental stock assets in return for equity, which will generate an income.

Brand marketing of the property portfolio will be financed by Fizzy. The aim is to provide a brand associated with high-quality private rental accommodation.

Click here for an animated infographic on what Fizzy delivers;

Thames Valley Housing Association:

Thames Valley Housing is based in Twickenham, West London and delivers housing for a wide range of people. Founded in 1966, the association manages and administers over 15,800 properties in London, Middlesex, Berkshire, Surrey, Hampshire, Oxfordshire, Buckinghamshire, Wiltshire and Susses, and has over 1,000 properties under construction.

Thames Valley Housing aims to meet the aspirations of all our customers and residents, helping them to get the home they want or need at the outset, providing further opportunities to move or buy later should they wish.  It provides affordable rented homes, HomeBuy, market rent and key worker accommodation, including the staff accommodation for eight NHS Trusts.

Fizzy funding:

Fizzy’s existing loan facility agreement with PGIM was amended and restated to include the Lewisham assets and the terms remain the same. The loan is a 10 year fixed rate facility to 2025; with each asset financed separately although the total loan facility is cross collateralised across the portfolio. The blended rate achieved for the Lewisham assets is just over 2.5%. The original financing achieved a rate of just less than 3% therefore the total blended rate over the full £53.4m facility stands at below 3%.

Since the original PGIM refinancing in January 2015, ADIA have committed a further £200m capital funding to Fizzy bringing their total commitment to £400m. Of the £400m, £317m is committed to schemes that are onsite or in planning. New schemes are under consideration to utilise the remainder of the available funding. TVH’s investment remains capped at £26m. Fizzy is delivering 368 flats during the next 12 months across three schemes (including the second phase at Lewisham) and is contracted to acquire an additional 292 PRS units being delivered in 2019 and 2020, bringing the total portfolio to 974 units.


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