Member Article

£10m North East Property Fund to boost region’s construction SMEs

A £10 million property fund has been set up in the region to support smaller scale North East construction and property development projects.

Managed by investment company FW Capital, the North East Property Fund has the backing of Santander, the North East LEP and is held by NPF 2016 Ltd, a special purpose vehicle set up by directors Michael Smith and Geoff Hodgson.

Created in response to demand from construction and property development SMEs, the fund will assist those who are unable to access mainstream finance from traditional sources.

The fund will provide loans from £250k to £1m for non-speculative residential and commercial developments in Tyne & Wear, Northumberland and County Durham.

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.

David Land, the North East LEP Investment Panel Chair, spoke about the fund’s importance and value.

He 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 finance.

“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.”

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