Homes England and Newstead Capital have joined forces to support small and medium (SME) sized housebuilders by launching an innovative long-term lending Fund providing residential development finance.
Homes England, the UK Government’s housing and regeneration agency, alongside Greater Manchester Pension Fund, clients of listed wealth manager Mattioli Woods and other private institutional investors, have committed £80m to the Initial Close of the Newstead SME Real Estate Lending Fund (RELF).
The Fund is to be managed by specialist Fund manager Newstead Capital. The intention is to grow the Fund to £300m in subsequent capital raised and deliver £1bn of funding over the Fund’s lifetime. It will help deliver Homes England’s mission to accelerate change in the housing market by bringing in new sources of institutional capital and diversifying lending channels to the SME housebuilding sector.
By empowering smaller regional housebuilders, it is hoped the Fund will help to encourage the creation of sympathetic and environmentally responsible projects while supporting the regional SME housebuilding sector alongside regional job creation.
Peter Denton, Chief Executive of Homes England, said: “This partnership is our latest intervention to offer SME housebuilders a route to finance that may otherwise be unavailable through traditional means.
“Introducing new sources of institutional capital to support SME house builders is a priority for Homes England. Our cornerstone investment in this Fund signals government support for accessible and competitive finance to meet the needs of SME developers across the country.
“We look forward to working with Newstead Capital, as well as our origination partners, and we now welcome further institutional capital to help grow this Fund and give SME housebuilders the helping hand they need to get more quality homes built in our regions.”
Simon Champ, CEO at Newstead Capital, said: “This is an exciting step for Newstead. Our Fund is the first of its kind. We are providing a conduit for long-term institutional investors to gain access to a market which until now has been out of reach.
“The Newstead RELF is aimed exclusively at the unfulfilled need for capital from regional housebuilders. Regional housebuilding has historically been critical to the economy, providing the country with a diverse range of smaller housing communities. The Fund gives pension, insurance, and wealth management institutions an appropriate long-term investment platform to support this vital industry.
“By meeting this demand, we will provide an attractive return for investors, including the taxpayer and Manchester retirees, while also empowering local SME builders to compete with larger housebuilders. The Newstead RELF Fund will allow more new homes to be built, tackling the housing shortage and contributing to levelling up by allowing smaller sites to be developed, with the associated environmental benefits.”
