A joint venture between Audley Group, the UK luxury retirement village provider, Schroders Real Estate and alternative lender Octopus Real Estate has completed on a £47 mln (€54 mln) development finance facility with Silbury Finance to fund a new 74-apartment Audley retirement village in Cobham, Surrey.
Alongside equity investment from Octopus Real Estate and Audley, the 26-month loan will fund the development of a retirement community in Cobham, in the South-East of the UK.
The retirement village, Audley Fairmile, will be operated by Audley and will comprise two-bedroom apartments, along with the Audley Club, including a pool, gym, restaurant and bar bistro, as well as suuport service Audley Care.
The joint venture was formed in August 2019 to develop four retirement villages with over 500 units in total, representing a total value of £400 mln. The development in Cobham is the third project undertaken by the joint venture.
Domas Karsokas, senior investment manager, Octopus Real Estate, said: 'We are really pleased to be working alongside our joint venture partners and Silbury on what promises to be a market leading UK retirement living development.
'The structure and terms of the debt sit well with the key feature of a retirement community development and will support returns to our institutional investors.
'The last year has shown the retirement sector to be a key resilient asset class within the alternative real estate sector. Customer sentiment has gone from strength to strength and we are thrilled to be able to proceed with another project that will go some way to fill the demand for this type of housing.'
The loan represents the first underwritten by Silbury Finance in the retirement living sector. Silbury Finance is backed by Oaktree Capital Management and launched in January 2021 to provide bespoke senior development finance solutions for waht it calls the 'structurally undersupplied' UK residential, retirement and student accommodation sectors.
Gary Burton, chief financial officer, Audley Group, commented: 'The strength of the retirement sector has never been more apparent than in the last year. While the pandemic has negatively affected many real estate asset classes, retirement villages have never been in more demand. The model has proven hugely effective at keeping older people safe and supported in their own homes.
'We are delighted to be working with Silbury on Audley Fairmile, another village in our already successful joint venture partnership with Octopus Real Estate and Schroders. Continuing to accelerate our growth means that we can provide much needed units to the market swiftly.'
Gavin Eustace, founding partner of Silbury Finance, commented: 'This is a landmark transaction for Silbury as we target £500 mln of lending this year, in a sector where we have significant experience financing schemes.
'The UK retirement living space is one of our high conviction calls due to its nascency and the associated reluctance of more traditional lenders and debt funds to underwrite mid-size development loans for experienced developers.
'We look forward to working alongside two highly credible counterparties in Audley and Octopus Real Estate to deliver this scheme, which we hope marks the start of a long-term relationship.'
