Beaufort Capital backs London later living scheme with £28m loan

UK developer Birchgrove, a senior living subsidiary of London-based investment management firm Bridges Fund Management, has secured a £28 million (€32 million) loan from UK alternative lender Beaufort Capital for its second scheme in London.

The firm acquired a development site in the London suburbs for £39 million using equity from Bridges. Beaufort, which lends through its Beaufort Capital Real Estate Debt Fund series, will provide a £28 million development facility at 60 percent loan-to-cost.

The 78-apartment development in the Hampton Court area of the London borough of Richmond-Upon-Thames will be constructed by developer Octagon Developments and is due to be completed in 2025. The project’s gross development value is forecast to increase to £68 million once all units are fully let, the firm said.

“Our first Birchgrove sites were established in Surrey, and we quickly found Londoners were driving down the A3 to enquire about the model and have a look at our developments. They loved it, but there was no real equivalent in the capital,” Honor Barratt, chief executive officer at Birchgrove, told Real Estate Capital Europe.

She explained senior living firms tend to operate in areas surrounding London rather than in the capital itself because planning approval is difficult to obtain.

“Planning in London can be difficult, and so most retirement living operators are skirting around the edges of the capital without actually coming in. This means if you’re an elderly Londoner, you don’t have an abundance of options. We’ve therefore taken the plunge and decided to push into London,” she said.

The firm expanded into London in July last year with the acquisition of a site in Chiswick. The project will provide 48 apartments and communal facilities. The firm said at the time that this will be the first development of its kind within the London Borough of Hounslow.

“By 2030 there are projected to be over 1.4 million people aged over 65 living in London, 400,000 aged over 80, and 80,000 aged over 90. At the same time, demand for the rental-in-retirement model is also growing: the number of pensioners in rented accommodation is set to double to over 1 million in the next decade. We therefore see a huge opportunity in London,” she said.

The development package for the Hampton Court site is the fourth transaction that Beaufort has backed Birchgrove on. It is also the largest loan it has provided to the developer.

“There aren’t a huge amount of deals to be had in this sector, and so when lenders get a sniff of a deal, they tend to be very quick and competitive. This is a growing market with a lot of potential, and so any deal in this space is important to them [lenders],” she added.

In January 2022, Birchgrove sold two developments to investment management firm M&G Real Estate, part of M&G’s £65 billion private assets division. The two schemes, in the UK’s South-East towns of Sidcup and Woking, were sold for £69 million and represented M&G’s first acquisitions in the UK senior living space. M&G said at the time that the transaction was the start of a projected five-year £200 million partnership with Birchgrove in the sector.