UK housebuilder Barratt Developments has injected £22.5m into Hearthstone Investments, the specialist residential property fund manager.
Barratt’s seed investment deal will be spread over three tranches and linked to the fund’s growth.
Barratt will contribute a portfolio of show homes which will be licensed back to the company. It will provide the fund with income before the show homes are let or sold once the development site is completed.
Hearthstone said the property-based seeding deal is the first in a series with major housebuilders that is expected to total about £50m.
Christopher Down, founder and chief executive of Hearthstone, said: “We believe investors should have the same choices in residential property as they do in commercial property and other asset classes, and our strong relationships with Barratt and other housebuilders will play an important part in achieving our goal. While individual buy-to-let portfolios and owner-occupiers will remain important, the reality is that the country needs investment in housing on a scale that these methods cannot deliver.”
Mark Clare, chief executive of Barratt, said: “Our strategy is to secure best value while unlocking cash from our balance sheet and driving down debt; selling some of our show homes and licensing them back achieves just that. At the same time, this new fund is an important strategic development in our marketplace – the creation of a professional private rental fund operating at scale, which is something the UK really needs.”
annabel.dixon@estatesgazette.com
