A joint venture between Audley Group (“Audley”), the UK luxury retirement village provider, Schroders Real Estate and Octopus Real Estate, the UK specialist real estate lender and investor, has completed on a £47 million development finance facility with Silbury Finance to fund the development of a 74-apartment Audley retirement village in Cobham, Surrey.
Alongside equity investment from Octopus Real Estate and Audley, the 26-month loan will fund the development of a retirement community in a highly sought-after location in Cobham, in the South-East. The retirement village, Audley Fairmile, will be operated by Audley and will comprise of two-bedroom apartments, along with the Audley Club, including a pool, gym, restaurant and bar bistro. Support services will be available on site and to the local community 24 hours a day through Audley Care. The investment in the retirement sector is designed to help address the undersupply of high-quality retirement housing in the UK, where demand is being driven by a growing ageing population.
The joint venture was formed in August 2019, to develop four best-in-class retirement villages with over 500 units in total, representing a total value of £400 million. The development in Cobham is the third project undertaken by the joint venture.
The loan represents the first underwritten by Silbury Finance in the retirement living sector. Silbury Finance is backed by Oaktree Capital Management and launched in January 2021 to provide bespoke senior development finance solutions for property professionals active in the structurally undersupplied UK residential, retirement and student accommodation sectors.
Domas Karsokas, Senior Investment Manager, Octopus Real Estate, commented: “We are really pleased to be working alongside our joint venture partners and Silbury on what promises to be a market leading UK retirement living development. The structure and terms of the debt sit well with the key feature of a retirement community development and will support returns to our institutional investors.
“The last year has shown the retirement sector to be a key resilient asset class within the alternative real estate sector. Customer sentiment has gone from strength to strength and we are thrilled to be able to proceed with another project that will go some way to fill the demand for this type of housing.”
Gary Burton, CFO, Audley Group, commented: “The strength of the retirement sector has never been more apparent than in the last year. While the pandemic has negatively affected many real estate asset classes, retirement villages have never been in more demand. The model has proven hugely effective at keeping older people safe and supported in their own homes.
“We are delighted to be working with Silbury on Audley Fairmile, another village in our already successful joint venture partnership with Octopus Real Estate and Schroders. Continuing to accelerate our growth means that we can provide much needed units to the market swiftly.”
Gavin Eustace, Founding Partner of Silbury Finance, commented: “This is a landmark transaction for Silbury as we target £500 million of lending this year, in a sector where we have significant experience financing schemes. The UK retirement living space is one of our high conviction calls due to its nascency and the associated reluctance of more traditional lenders and debt funds to underwrite mid-size development loans for experienced developers. We look forward to working alongside two highly credible counterparties in Audley and Octopus Real Estate to deliver this scheme, which we hope marks the start of a long-term relationship.”
