Broadwood Capital has secured backing from Aviva Investors for a dedicated sustainable later-living credit fund. The Broadwood Later Living Sustainable Construction Finance Fund (the Fund) will provide finance for the development of new care homes and later-living residential properties that meet selected environmental and sustainability criteria.
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 properties. Developers will need to demonstrate that completed properties meet—or exceed—energy use targets and that the development promotes environmentally sustainable construction.
As a specialist sector, ultimately underpinned by operational real estate and governed by a regulated framework, later living developments have historically suffered from limited funding options in comparison to other more traditional real estate asset classes. The Fund aims to address this shortfall and offer reliable financing options from a lender with genuine sector expertise, which can support developers in achieving their goals.
The discretionary fund has an initial capacity for c. €119m of gross lending, with the seed investment being provided by Aviva Investors Climate Transition Real Assets Long Term Asset Fund (LTAF). 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.
The intention is 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 ageing demographic.
As part of the agreement, 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, CEO of Broadwood Capital, said: “There is an indisputable demographic shift taking place in the UK. We have a rapidly ageing 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. This is a very challenging environment in which to raise capital, and we are incredibly privileged to have the support of Aviva Investors and we are looking forward to working with Ben Sanderson, Luke Layfield and the wider Aviva Investors team, as we grow the Fund over the coming years.”
Luke Layfield, Head of Portfolio Management, Private Markets at Aviva Investors, added: “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. As an investor aiming to deliver long-term investment outcomes for retirement savers whilst also deploying capital where it has the potential to make a positive contribution within communities, we are very pleased to partner with Broadwood Capital, a best-in-class credit manager, in providing funding to deliver additional later living facilities.”
The Broadwood Later Living Sustainable Construction Finance Fund is operated and administered by Khepri, an FCA regulated AIFM and fund administrator. Taylor Wessing LLP acted for Broadwood Capital Limited as legal advisor on structuring the Fund.
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