Investment round-up – from eco-friendly developments to retirement living growth

Funds advised by Hilltop Credit Partners, a specialist funding partner for SME residential developers, have completed a £3 million loan to build a sustainable residential development in the historic market town of South Molton.

The Devon town, which has a population of just over 5,000 people, is best known for its role in ending the Penruddock uprising, a conspiracy to restore Charles II to the throne of England.

The project to bring eco-friendly homes to the town is being led by experienced property developer Jamie MacDonald-Murray, the founder of Talo Homes, which is exclusively focused on delivering affordably priced, environmentally-friendly housing in the South West of England.

All of the planned units are set to qualify for the Help to Buy scheme, with sales targeted for late 2021/early 2022.

The finance is set to be used for the site acquisition and ground-up development of 14 eco-friendly residential units, made up of eight detached and six semi-detached houses. The units, built using a modular, timber-frame construction system to deliver high-quality, energy-efficient homes at competitive prices, will also benefit from off-street parking and private garden space.

The site is located near the centre of South Molton, which is often described as the ‘Gateway to Exmoor’.

The South West of England’s property market is currently seeing strong sales volumes of new-build homes, as well as rising property prices. This is being driven by local demand, inward migration from the South East, and a region-wide deficit of new-build homes.

In its August 2020 report, property portal Rightmove notes that ‘the out-of-city exodus has helped push prices to record levels in Devon and Cornwall…where working from home means a different lifestyle much closer to your new doorstep.”

According to Rightmove, across the UK agreed property sales were up 38% year-on-year for the period July 12-August 8, with asking prices up 4.7% year-on-year. This resilience has been attributed to a number of things, including strong levels of pent-up demand in the market, recent changes to stamp duty, and fundamental shifts in working/living preferences that have emerged throughout the UK’s Covid-19 lockdown.

MacDonald-Murray said of the deal: “I am thrilled to be funding this project with Hilltop Credit Partners, who understand the complexities involved with development finance. Despite the economic uncertainties that emerged throughout the funding process, Hilltop delivered on their commitments. We believe this is an exciting development, which should attract strong demand from both local buyers and the increasing number of residents across the UK looking to move further away from large cities.”

Jacob Andersen, associate partner at Hilltop Credit Partners, added: “We are pleased to be working with Jamie and his team, who bring decades of residential real estate development experience to the table. We believe Talo’s product – which combines high-quality construction and design, with green space, energy efficiency and affordability – caters perfectly to today’s prospective home buyers, and we look forward to seeing the finished product.”

The deal brings Hilltop’s total funding commitment for 2020 to approximately £30 million, while the firm says it is also sitting on a strong pipeline for the rest of the year.

“We will continue to go the extra mile to help SME developers fund their projects by offering an attractive one-stop funding solution,” Andersen added.

Joint venture set to deliver new retirement housing

One of the UK’s leading providers of luxury retirement villages has formed a joint venture with the Royal London Pension Property Fund (the Fund) to deliver a new retirement village in Buckinghamshire.

Once complete, Audley Wycliffe Park will become the 21st village in Audley Group’s portfolio, with a GDV of £80 million.

The JV agreement marks Royal London’s first investment into the retirement living sector and covers a 25-acre site at Horsleys Green, between Stokenchurch and High Wycombe. The village is set to provide a total of 156 high-quality retirement living properties and luxury facilities.

The capital for the development of Audley Wycliffe Park will be provided by the Fund, which will retain freehold ownership when all the properties are sold.

Audley Group, which is owned by the Moorfield Audley Real Estate Fund, will then enter a 250-year lease giving the Fund ‘secure, inflation-linked income’.

Audley, with its extensive sector experience, will take on the operational running of the village, including the sales and marketing of all the properties. Throughout the development phase, Audley is set to support Royal London and oversee the design and fit out of the extensive Club facilities ‘to ensure its usual high standards’.

“This is a first for the expanding retirement village sector and demonstrates the unique and sustainable income they generate,” the company says.

Audley Villages aim to enable owners to live an independent and healthy lifestyle in their own homes, with flexible care, wellbeing services and support when required. These services are accessible to both property owners and neighbouring communities.

The villages are also home to the Audley Club, which offer luxurious facilities to owners, local members and Audley owners from all villages around the UK, including a library, restaurant and bar, swimming pool and luxury health club.

Owners purchase their apartment on a 250-year lease. Care at each village is delivered by Audley Care, Audley’s award-winning CQC-registered care provider.

Active in the retirement living market for more than two decades, this latest scheme will increase Audley Group’s portfolio to 21 once completed, providing over 2,000 properties nationwide. 

“This new innovative JV structure highlights the breadth of opportunities for investors within the retirement living sector,” Nick Sanderson, founder and chief executive of Audley Group, commented.

“We are delighted that such a major new entrant to the market has recognised the stability, security and longevity of this sector. Working with Royal London allows us to deliver our first-class offering in a way which is less capital intensive and provides Royal London with a secure, inflationary linked, long-term income stream.”

He said the retirement living sector has significant investment potential, which is only set to grow as the government places more attention on ‘fixing the broken social care model’ by increasing the supply of suitable housing that can provide care and wellbeing services and help preserve independence for as long as possible.

“The demand for retirement village living continues to expand and we have no doubt that this is just the start of a fruitful working relationship with Royal London,” he added.

Andrew Johnston, head of alternative property investment at Royal London Asset Management, said: “We’re delighted to have completed this JV arrangement with Audley Group and look forward to getting on site this quarter with our first project in the retirement living sector and working together to deliver an outstanding retirement village.”

He also believes the retirement living sector in the UK presents significant investment opportunities, with an ageing society and a significant undersupply of modern, purpose-built, age appropriate housing.

“Addressing this undersupply can have far-reaching benefits such as a more efficient housing market, contributing to the fight against climate change, a more efficient use of energy and supporting changes in social care. Investors have an opportunity to make a real difference and make a positive impact while securing attractive returns.”

Developer delivers strong performance 10 years on from launch

London Square, a leading residential developer, has delivered a strong performance and its best sales results so far in its latest annual results – a decade on from the firm’s launch in 2010. 

The company completed on 559 homes, up from 253 in 2019, while revenues rose to £272.4 million – an increase on £168.3 million in 2019. Meanwhile, revenue under management increased to £314.2 million, from £196.6 million in 2019, and operating profit was up to £10.8 million from £6.5 million last year.

Forward sales stand at £190 million, up from £180 million in 2019, while the land pipeline of 2,353 homes represents £1.2 billion in gross development value (GDV).  

Mark Pain, chairman at London Square, commented: “The Group delivered a strong operational performance, achieved despite the impact of the growing likelihood of the UK leaving the EU without a formal withdrawal agreement and the year-end being impacted by the effects of the Covid-19 pandemic.”

He added: “The Group continued to successfully implement its strategy and diversify the activities of the business, with the strongest year yet in residential sales, with 559 units delivered; London Square Partners, with significant contracts being achieved with Peabody and Clarion and post-year end with One Housing, improving the Group’s Land Bank.”

Adam Lawrence, chief executive at London Square, said: “These are our best results since launching in 2010 at the height of the recession. This year has continued with uncertainty about the UK and its future on leaving the EU, plus the immediate impact of the Covid-19 pandemic.  All our sites and sales offices had re-opened by May 2020 and although, with government restrictions in place, we are operating at 80% capacity, we are confident that delivery can be maintained.”