Silbury Finance, the Oaktree Capital Management-backed development lender, has passed half a billion of committed lending in the UK Living sector in under two years, with the provision of a £64.3 million loan to a joint venture vehicle (“JV”) established by Elysian Residences and Senior Living Investment Partners, a partnership between Pension Insurance Corporation plc (“PIC”) and Octopus Real Estate. It will fund the acquisition and development of a 124-residence luxury retirement scheme by market leader Elysian Residences, in How Wood, St Albans.
Having launched in January 2021, Silbury has to date originated £554 million of new finance across the retirement living (47%) and build to sell (53%) sectors, with a Gross Asset Value of over £800 million, to 11 different borrowers across 15 loans. Recognising the role that real estate has to play in mitigating climate risk, £220 million of the committed finance has been sustainability linked, incentivising borrowers to deliver schemes that meet the highest environmental standards.
The most recent transaction will see the JV deliver a luxury scheme comprising 80 apartments and 44 two-bedroom bungalows, featuring a restaurant, café/bar, library, wellbeing and therapy centre, cinema, village green and orchard gardens. St Albans is an ideal location for a retirement living development, with a high proportion of owner occupier households aged 65+ in the local area.
Gavin Eustace, Founding Partner at Silbury Finance commented: “Silbury was launched in direct response to the paucity of highly experienced, well-funded and sustainability-focused lenders in the mid-ticket residential development space. Exacerbated by the retrenchment from the sector caused by the Covid pandemic, we have witnessed unprecedented and increasing enquiry levels from a range of borrowers, from global institutions through to dynamic regional SMEs, for our bespoke capital solutions. We retain a high conviction in the structurally undersupplied living sector, which continues to demonstrate attractive countercyclical characteristics and is underpinned by highly favourable demographic and societal drivers.
“Backed by a deeply experienced global real estate investor in Oaktree, and with further market dislocation likely as result of the challenging economic backdrop, we have ambitions to accelerate our deployment in 2024. Whilst remaining highly disciplined in our underwriting, we have a strong pipeline of borrowers seeking flexible funding solutions for high quality and environmentally responsible schemes.”
Domas Karsokas, Investment Director, Octopus Real Estate, commented: “We are pleased to be moving forward with the development of what will be a market-leading retirement community, alongside Elysian, PIC and Silbury. All businesses recognise the need to deliver IRCs at pace, and share some of our core values, particularly in terms of sustainability. The structure and terms of the debt are well suited to a development project and will support returns to our institutional investors.”
Gavin Stein, Chief Executive Officer, Elysian Residences, commented: “We are delighted to be progressing a new market-leading community in St Albans, with the Pension Insurance Corporation (PIC) and Octopus Real Estate. Senior Living Investment Partners is further proof that this rapidly growing alternative residential sector is fulfilling its potential to deliver at an institutional level.
“Careful consideration of the market has revealed St Albans to be a prime location for development of a luxury retirement scheme, with strong demand anticipated from local people aged 65+ whose choices are limited in the immediate area. As a market leader in the provision of luxury retirement developments, Elysian Residences will set a new standard within the St Albans market and challenge existing perceptions of retirement living.”
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