PfP Capital, the fund management business established by Places for People Group, has announced plans 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 mln (€170 mln) which will be comprised of a £47.5 mln investment from the Scottish Government and an initial £10 mln capital commitment from Castle Rock Edinvar. PfP Capital will look to raise at least £87.5 mln 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 1,000 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, 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, 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.'
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.