Newstead Capital enters development finance partnership with Homes England

Homes England, 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) with an aim of increasing this to £300m in subsequent capital. It is expected to deliver £1bn of funding over its lifetime. 

This will support the SME housebuilding sector by offering diversified lending channels and additional sources of institutional capital. 

The fund is expected to assist in the development of over 5,000 high-quality, affordably priced, and efficient new homes throughout England. 

It will also encourage environmentally responsible projects. 

ESG focus

Newstead Capital will underwrite each case on its own credit, environmental, social and governance (ESG) metrics and encourage the development of sustainable housing by taking new homes’ energy efficiency into account at the underwriting stage. 

The lender is a signatory to the UN Principles for Responsible Investment and focuses on projects which align with its ESG standards, such as the creation of jobs and apprenticeships as well as avoiding waste and emissions. 

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 and 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 our new partners and 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, added: “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.” 

He said the fund was exclusively aimed at regional housebuilders, who were “critical to the economy, providing the country with a diverse range of smaller housing communities”. 

Champ said the fund also gave pension, insurance and wealth management institutions an appropriate investment vehicle to support the industry.  

He added: “By meeting this demand, we will provide an attractive return for investors, 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.”