New £10 million property fund launched in North East
A £10 million property fund aimed at supporting smaller scale
North East construction and property development projects will
provide an important boost for the construction industry.
The idea for the fund was conceived by FW Capital, the
investment company based in the North of England, who will now
manage the North East Property Fund. The fund is backed by
Santander and the North East LEP and is held by NPF 2016 Ltd, a
special purpose vehicle set up by directors Michael Smith and Geoff
Hodgson for this purpose.
The North East Property Fund has been created in response to
strong demand from small and medium-sized (SME) construction and
property development companies who are unable to access
mainstream finance from traditional sources and is hoped it will
help kick start development in smaller scale property ventures
across the North East.
“Santander is proud to support this new venture which will have
a tangible impact on the local North East economy, including
significant job creation,” said Stephen Carmichael, Relationship
Director, Santander Corporate & Commercial.
“This is a brand new fund concept in the North East combining
both public and private money to benefit SME property developers in
the region. We were pleased when FW Capital approached us and the
North East LEP about the fund idea. It’s a bold and compelling
initiative that is confronting head-on the urgent need to deliver
more new-build property.”
The fund will provide loans from £250,000 to £1 million for
non-speculative residential and commercial developments in Tyne
& Wear, Northumberland and County Durham. Typical repayment
terms are between nine and 18 months.
Like other regions in the UK, smaller construction and property
development companies have struggled to access finance from
traditional lenders, leading to a new-build deficit in residential
and commercial properties. This has in turn led to housing
shortages in the area.
In terms of the North East itself, an estimated 6,440 homes were
built last year vs an annual target of 9,000; only 1,420 of the
3,800 target for affordable homes were built in the region; this
shortfall is compounding the legacy deficit year on year.
David Land, the North East LEP Investment Panel Chair said: "The
North East Property Fund will tackle a pressing need identified in
the region's Strategic Economic Plan to build more homes which in
turn will help drive economic growth.
“Our ambition is for the North East to return to pre-recession
housing rates of more than 6,000 new houses a year and this new
fund provides smaller construction firms with the confidence to
pursue projects to build vital new housing.
"A similar fund in Wales has had a proven impact and demand to
access this type of investment in our region is strong."
The fund is based on the highly successful Wales Property
Development Fund that has been operating for almost four years
within the Finance Wales Group. FW Capital is part of the
Finance Wales Group and they currently manage a number of funds in
the North of England.
“At FW Capital we’re able to combine our existing local
knowledge with shared expertise regarding property fund management
in the wider Finance Wales Group,” explained Fund Manager Joanne
Whitfield. “We’ve supported some excellent companies in the North
East over the last seven years with a range of growth finance
solutions from short-term loans to mezzanine and equity
“We’re looking to expand our offering so that developers here in
the North East will benefit from similar success we’ve seen in
Wales with the Wales Property Development Fund. We pride ourselves
on being a trusted finance partner of small and medium businesses
across the North of England and we are delighted to be able to
offer this new product to support smaller developers to grow.
The fund will operate on a commercial basis and by reinvesting
returns into future projects it has the potential to provide over
£30 million of finance into smaller developers over the next five
It aims to finance the build of over 300 new homes and
finance the development of around 4000 square metres of commercial
space. This is forecast to contribute in excess of £25m to the
regional economy, creating or safeguarding over 600 local
Square One Law acted for FW Capital on setting up the Fund, Ward
Hadaway acted for Santander and DWF acted for the North East LEP.
PwC and UNW provided financial due diligence services to Santander
and the North East LEP.
The team at Square One Law has been involved in the creation of
over 25 funds. Mark Lazenby, Partner and Head of Finance, said:
“The creation of a property fund for the North East is great news.
This is the first time a fund like this has been set up in England
and it will build on the great work FW Capital has done with the
Wales Property Development Fund as well as assisting the North East
LEP to deliver its Strategic Economic Plan.
“The use of innovative funding structures like this to help
recycle public monies and create public/private partnerships will
be a good way to help sustain economic growth in the North
Businesses wishing to apply for investment from the fund should
contact Tony Cullen at FW Capital on 0191 269 6966, email Tony at
or visit www.fwcapital.co.uk for more