Aviva Investors has backed a new UK later-living real estate credit fund created by specialist alternative lender Broadwood Capital.
The Aviva Investors Climate Transition Real Assets Long Term Asset Fund (LTAF) has committed to Broadwood Later Living Sustainable Construction Finance Fund, to provide finance for the development of new care homes and later-living residential properties.
As part of the agreement, Ben Sanderson, managing director of real estate at Aviva Investors, will join the board of the fund’s management company while Luke Layfield, portfolio manager of the Aviva Investors Climate Transition Real Assets LTAF, will sit on the fund’s credit committee.
IPE Real Assets understands that the Aviva-backed fund operates on a discretionary basis, with no fixed commitment. However, it aims to raise an initial £100m (€119m), including leverage.
The fund will provide developers with loans of up to 90% of total cost and 75% of value, to support the construction of new-build property, the fund’s manager Broadwood said. It added that it 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 fund intends to expand its capital base through further third-party investment in the first half of 2025, the manager added.
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.”
Layfield 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.”
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