Bank confidence underlined by Standard & Poor thumbs-up for troubled landlord
Shaftesbury Housing Association has agreed loans of £20.8m despite being under Housing Corporation supervision.

The money, from Lloyds Bank, will fund two London university developments being built by the association's student housing arm, Shaftesbury Hallmark, which will buy them from the parent association.

A £12m loan will be used to build halls for the London Institute with architect TP Bennett.

A further £8.8m facility will fund accommodation designed by architect Haworth Tompkins at City University.

The loan is an indication of lenders' confidence in the assocation. Lloyds said it was convinced that Shaftesbury's finances remained strong and were not the cause of the corporation's intervention.

Paul French, senior relationship manager at Lloyds, said: "[Shaftesbury] took a very positive approach to the supervision and why it happened. It's a group we have confidence in. They have lots of experience in the market."

French said the bank had assessed threats to the student vacation lettings market – such as fears of terrorist attacks – but was confident they would not affect long-term demand.

The loans last for 28 and 21 years respectively. Occupancy of the buildings is only guaranteed for 15 years though the guarantee can be renewed for another 10 years. Lloyds believes demand for the flats will remain high.

Colin Adams, Shaftesbury finance director, said: "These projects provide good-quality accommodation by working in partnership with higher education institutions."

Shaftesbury went into supervision on 17 October 2003 after problems with its subsidiaries' repairs service and a complex management structure (HT 24 October 2003, page 13).

Credit rating agency Standard and Poor's reviewed Shaftesbury's strong rating of A– when it went into supervision, but has decided there is no cause for concern. Last month, it took Shaftesbury off its "credit watch".