Guy Hands’ Terra Firma has successfully priced the year’s largest issue of payment-in-kind notes, a product previously considered to be one of the most controversial instruments in the pre-crisis years, as part of its acquisition of a portfolio of rented properties.

The UK buyout firm yesterday priced £550m of PIK notes to finance its acquisition of Annington Homes, which is one of the largest private owners of UK residential property, from Nomura.