Broadwood Capital has secured backing from Aviva Investors for a £100m sustainable later living development credit fund.
The Broadwood Later Living Sustainable Construction Finance Fund will provide finance for the development of care homes and later living residential properties.
The debt fund will provide experienced developers with loans of up to 90% of total cost and 75% of value, to support the ground up construction of new-build property.
Developers will need to demonstrate that completed properties meet or exceed energy use targets and that the development promotes environmentally sustainable construction.
The fund aims to address the shortfall of “limited funding options” in the later living sector and offer reliable financing options.
The discretionary fund has initial capacity for £100m of gross lending, with the seed investment being provided by the Aviva Investors Climate Transition Real Assets Long Term Asset Fund. Broadwood has originated a number of later living loans and expects the fund to be just under 50% deployed before the end of the year.
It intends to grow the fund with further third-party investment in the first half of 2025, providing investors access to a credit strategy focusing on delivering assets that meet the demands of the aging demographic.
Ben Sanderson, managing director, real estate, at Aviva Investors, will join the board of the fund’s investment management company whilst Luke Layfield, portfolio manager of the Aviva Investors Climate Transition Real Assets LTAF, will sit on the fund’s credit committee.
Dan Smith, chief executive of Broadwood Capital, said: “We have a rapidly aging population and do not currently have the infrastructure to support it. With future later living accommodation requirements unlikely to be delivered via the public purse or from traditional lenders, we need to look at more creative ways of providing essential capital to developers.
“The fund does exactly this and not only offers investors access to a credit strategy delivering attractive risk adjusted returns, but also to a strategy which is promoting the climate and social agendas.”
Layfield said: “Later living is an important part of the UK housing market and one where there is a fundamental need to support supply of new homes.”
Taylor Wessing acted for Broadwood Capital as legal advisor on structuring the fund.
Image © Shutterstock
Send feedback to Akanksha Soni
Follow Estates Gazette
