PfP Capital, our fund management business, has announced that it intends to launch a new fund in partnership with the Scottish Government to invest in mid-market rent (“MMR”) properties throughout Scotland.
PfP Capital is targeting a total fund size of £150 million which will be comprised of a £47.5 million investment from the Scottish Government and an initial £10 million capital commitment from Castle Rock Edinvar is intended. PfP Capital will seek to raise at least £87.5 million of additional capital from third parties over the coming months.
The fund is expected to benefit from index-linked returns derived from the rental income and will target institutional and pension fund investors, with a focus on Local Government Pension Schemes (“LGPS”).
Once established, the fund will look to source sites for, and develop and operate, around 1000 much needed new MMR homes across Scotland providing affordable housing to people on low and modest incomes. The investment from the Scottish Government is a significant commitment to implement its plans to deliver 50,000 affordable homes by 2021.
Chris Jones, Managing Director at PfP Capital, said: “This investment will allow us to operate a strategy delivering a significant number of affordable homes to people across Scotland and we are delighted to work with the Scottish Government on this exciting initiative. This fund will also provide a great opportunity for institutional investors to fund the next generation of Scotland’s affordable homes and secure stable, inflation-linked returns.”
Richard Jennings, Managing Director at Castle Rock Edinvar, said: “This fund demonstrates the importance of financial innovation in delivering affordable homes and Castle Rock Edinvar is delighted to be an early investor. We are looking forward to working with Places for People Group colleagues at PfP Capital and making it a success.”
Making the announcement during a visit to a housing development in Edinburgh, Housing Minister Kevin Stewart said: “This investment will support people on low and modest incomes to access high quality rented accommodation at affordable rates and is one of the many ways in which we are delivering on our target of 50,000 affordable homes by 2021, backed by over £3 billion.
“Affordable housing is about more than just bricks and mortar. We want everyone to have a safe, warm home and schemes like this will help to create a fairer Scotland, while delivering great economic benefits.”
PfP Capital has appointed Noble & Co as financial adviser and placement agent on the launch of the Fund, with Rettie & Co. appointed as property adviser to identify suitable mid-market rent investment opportunities.
The above is intended as a mere statement, it does not constitute or form part of, and should not be construed as, an offer, invitation or inducement to purchase or subscribe for securities nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This statement does not constitute either advice or a recommendation regarding any product.