Private-Equity Backed Lender Wants To Put £300M Into UK Resi Development
UK debt provider Hilltop Credit Partners has received investment from private equity firm Metropolitan Real Estate that will allow it to fund the construction of 1,000 residential units.
Hilltop said the new investment would allow it to deploy £300M into UK residential development, with a focus on the UK regions, in markets where it thinks there are strong supply-demand fundamentals.
The company estimated that UK residential development lending has fallen up to 40% since 2008, as high-street banks have withdrawn from the market due to new regulatory capital requirements and the impact of Covid-19. The UK could therefore face a funding gap of about £200B that will need to be covered over the next decade in order to achieve the government’s housebuilding targets of 300,000 new units a year, Hilltop said.
Hilltop founder and Chief Executive Paul Oberschneider is the keynote interviewee at Bisnow’s free webinar on 16 March, Financing & Available Capital In An Uncertain Environment. To join, sign up here.
Despite the challenging economic backdrop in 2020, UK residential property prices rose at their fastest rate in six years, Hilltop said, as strong pent-up demand coincided with a slowdown in the supply of new housing. More affordable regions outside of London showed the strongest performance.
Hilltop is backed by private equity firm Round Hill Capital, which is a specialist in various forms of residential real estate. The company has so far provided debt to facilitate the construction of 250 UK homes. It provides funding for up to 90% loan-to-cost, with loans ranging from £5M to £50M.
Last month, BentallGreenOak bought Metropolitan, a real estate multi-manager with $2.4B of assets under management, from Carlyle. Metropolitan committed about £60M in 2021 to purchase a portfolio of existing development loans across five regions and to continue funding the active pipeline.
“We are investing with an experienced team in an already seeded, and growing, portfolio of affordable residential loans that provides visibility and proof of concept in attractive locations with quality local sponsors,” Metropolitan Managing Director and Head of Europe Cherine Aboulzelof said.
