London-based bank NatWest has provided a £285 million (€291 million) loan for a housing project backed by a joint venture between EQT Exeter, the real estate arm of global investment organisation EQT, and urban residential development firm Sigma Capital Group.
The funding comprises an investment facility and a revolving development facility funded by NatWest and Leumi UK, the subsidiary of Israeli lender, Bank Leumi.
EQT and Sigma established their partnership in 2020 to build more than 3,000 apartment blocks and houses for the private rented sector, predominantly located in outer areas of the UK capital and in close proximity to transport links, which provided access to central London.
At launch the partners had five projects at locations including the west London borough of Ealing, Enfield in the north, as well as development sites in Barking and Dagenham – in the east of the capital.
These initial acquisitions were financed with a £50 million loan facility from Homes England, the UK government’s housing body responsible for increasing the number of new homes built in the country, and sponsored by the Ministry of Housing, Communities & Local Government.
The homes are offered at a rent that is set according to each location’s average household income.
Where possible, the homes – which will be located near green space – will connect into local community heating networks and use photovoltaic panels. Residents will also have access to cycle storage.
Lee Franklin, director of structured real estate finance at NatWest said the project was “wholly consistent” with NatWest’s ethos of “purposeful lending”.
Earlier this year, NatWest, together with Leumi UK, Allied Irish Bank and NIBC, provided an initial agreement of £150 million to the joint venture. This brings the total funding for EQT and Sigma Capital’s build-to-rent housing project to £285 million. This flexible debt package supports both the joint venture’s current schemes and future acquisitions planned for 2023.
Peter Shacalis, managing director at EQT Exeter, said the financing solution was designed to be scalable to help the joint venture achieve its longer-term business plan and strategy.
Other affordable housing lending activities
In September, Barings’ undertook its maiden affordable housing loan in the UK. The investment giant, a subsidiary of US insurer MassMutual, provided Domus Social Housing, a UK social infrastructure platform, with a £62.9 million, 15-year facility to fund its acquisition of 54 properties in London, the Midlands and the northwest of England.
Although the loan is Barings’ first in the affordable housing sector in Europe, the company has been active in the sector in the US for 25 years, where it reported making $4.5 billion of total investments to date.