Private equity firm Sun Capital Partners has secured a £250m investment mandate with Santander-owned alternatives manager Deva Capital, which it aims to deploy into distressed UK real estate over the next two years.
Sun Capital has launched a platform called Hillcrest, which will invest the capital into alternative uses, focusing on the student and senior living sectors as well as healthcare. The portfolio is expected to comprise both office-to-resi conversions in city centres and new-build developments.
The investment strategy will build on Sun Capital’s previous experience in the real estate sector gained through its investment in UK housebuilder Keepmoat, which it has since exited.
Sun Capital managing director Jamie Mount told EG that the property cycle in the UK is heading towards a comfortable entry zone, and that assets will be acquired as a “six or seven-year play”.
He added: “There is stress in the market at the moment, which is creating some interesting opportunities.
“Towards the end of last year and at the beginning of this year the macro environment changed beyond all recognition. We have high and persistent inflation, and interest rates are high and look like they will stay that way for longer than ever. We have supply-demand imbalances that pop up in labour or in goods, and then obviously wider global political and economic uncertainty, including events in Ukraine and the Middle East and China’s recession.
“We have positioned ourselves so that we have the capital and the resources to take advantage of the appropriate opportunities. And we can do that very quickly and decisively.”
Hillcrest was co-founded by Mount and Sun Capital chief executive Marc Jonas.
Jonas, whose former roles include executive chairman of Punch Taverns before its IPO, previously led the sale and leaseback of Santander’s retail branch network in Spain.
As well as Keepmoat, Mount has focused on real estate investments at Sun Capital including Uro Property Holdings and ilke Homes.
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