Heartland secures new funding for reverse mortgage business

Heartland Holding Group chief executive Jeff Greenslade. Photo / Natalie Slade

Heartland Group Holdings has secured a A$142 ($154m) million funding line allowing it to continuing expanding its reverse mortgage business in Australia.

The NZX-listed business, which owns Heartland Bank, said it had completed the syndicated loan securitisation through its Australian subsidiary.

Jeff Greenslade, Heartland chief executive, said the transaction would provide Heartland funding with a 30-year maturity and increase its access to Australian reverse mortgage loan funding to A$1 billion.

"The transaction achieves another milestone in executing Heartland's strategy to diversify type, source and tenor of its Australian funding and importantly evidences market liquidity to existing warehouse funders."

The syndicated loan was funded by offshore institutional investors including a cornerstone investment from M&G Investment Management - a UK-based investment manager.

Greenslade said the financing structure also matched Heartland's reverse mortgage assets with the Solvency II requirements of European insurers and gave it access to deep pools of efficient, long-dated funding that was typically unavailable to most Australian non-bank financial institutions.

That had enabled Heartland's reverse mortgage asset portfolio to achieve 98 per cent leverage, he said.

Greenslade said Heartland was now Australia's largest reverse mortgage provider with a market share of 26 per cent and it estimates the market has a lot more potential to grow.

"Australian retirees are estimated to own around A$1.5 trillion in home equity – by far their largest pool of wealth in retirement.

"Accessing a global base of offshore investors will assist Heartland to continue to enable thousands of Australian retirees to unlock this wealth while continuing to live in their own home."

Heartland is due to announce its result on Thursday for the year to June 30.

The company made $39.9m for its first half in the six months to December 2019 up from $33.1m.

It paid an interim dividend of 4.5c per share but said on August 11 that it was still considering whether it will pay a full year dividend.

In April the Reserve Bank of New Zealand prohibited all New Zealand registered banks from paying a dividend.

Heartland said that did not stop it from paying dividends to its own shareholders and would make an announcement at its full-year result.