UK - A new socially-responsible real estate fund backed by local authority pension funds has invested in the UK care home sector.

The Bridges Sustainable Property Fund, which was launched in November 2009 and includes capital commitments from West Midlands and Merseyside pension funds, has entered into a development partnership specialist care sector developer Castleoak.

Bridges Ventures, which manages the fund, announced it had agreed terms and would provide an initial equity investment of £5m.

The investment will be used to fund a series of pre-let Barchester Healthcare care home development projects, which will be sourced, delivered and managed by Castleoak.

The collaboration will initially see five new care homes developed, with the prospect of additional investment to cover more projects, forming part of a wider development programme announced by Barchester recently.

The Bridges Sustainable Property Fund aims to invest directly or through joint ventures in regeneration areas and buildings that "show environmental leadership".

Simon Ringer, managing director of the fund, said the recent transaction was an opportunity to invest alongside an experienced partner in a series of pre-let developments, in a sector with a shortage of good-quality accommodation to meet the needs of an ageing population.

"Castleoak's reputation and long-term experience combined with the fundamental strength of the care sector - where income will be derived from such a strong covenant - made this a very attractive proposition," he said.

"Our investors will benefit from attractive financial returns through both development profits and strong income returns. The investment also provides an excellent opportunity to demonstrate environmental leadership in the design and construction of buildings which typically have high energy use requirements," he added.

The first two sites have been acquired by Castleoak for construction starting in 2010, with several more under negotiation.

The care homes will be pre-let to Barchester Healthcare Homes on a long-term lease with an option to purchase the freehold within the first four years.

Each development will need to feature construction and energy management initiatives which maximise environmental impact and demonstrate environmental leadership.

"This partnership creates the opportunity to make a positive difference not only by providing first-class care accommodation, but also by helping to demonstrate how new care homes can respond to the environmental agenda," said Mel Knight, executive chairman of The Bridges Sustainable Property Fund.

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