HGP commits £15 million of equity for 300-home residential Joint Venture

Housing Growth Partnership (“HGP”), the Lloyds-backed equity investor in the UK Living sector, has committed £15 million of equity to a newly formed joint venture (“JV”) with Cayuga Homes (“Cayuga”), the Sussex based property developer. The JV will target the delivery of up to 300 homes for sale, along England’s South Coast, and is HGP’s latest investment under its Regional Growth Initiative (“RGI”) model.

The JV completed its first acquisition, the Montague Quarter Shopping Centre in Worthing, in October, with HGP investing £4.2 million. Cayuga has secured planning for the delivery of 42 energy efficient flats above the shopping centre’s commercial tenants, which include TK Maxx, Nandos, HMV as well as local shops and restaurants. Construction will begin on site in January, alongside contractor Trinity Homes, with the scheme due to complete in Q3 2025.

Alongside HGP, Paragon Development Finance (“Paragon”) has provided the JV with a £14.5 million senior acquisition and development facility to support the delivery of the scheme.

James Hutchinson, Investment Director at HGP, commented: “This JV alongside Cayuga is the latest demonstration of our continued commitment to providing SME developers with institutional equity support, to accelerate the delivery of much needed housing across the UK. This initial investment under our Regional Growth Initiative provides a blueprint for how town centre retail assets can be regenerated to meet local housing demand, in a sustainable manner, and is closely aligned with our social impact objectives.”

HGP’s RGI was established with the purpose of providing a longer-term equity commitment to SME developers & housebuilders to help realise their growth plans. The RGI provides ambitious management teams with access to a pot of institutional equity to fund multi-site growth plans, allowing them to free up their own equity to invest into their growing businesses. To date, £67 million of the c. £300 million of total equity invested by HGP has been under the RGI structure, supporting 11 SME developers and housebuilders to deliver 1,621 homes.

HGP, Paragon and Cayuga Homes previously partnered to deliver a seven-story, 33-apartment, Kingsway scheme in Hove, Brighton. HGP committed £3.2 million of equity, supporting Cayuga with site purchase and development equity as well as providing access to its unique panel of senior advisers, who can provide developers with guidance around development finance, ESG, Modern Methods of Construction, Project Management, Sales, Marketing and more. Paragon provided c. £18 million of senior debt for the delivery of the scheme, which is expected to complete in Q1 2024.

Ed Deedman, Director of Cayuga Homes commented: “Cayuga are extremely proud of our new JV with Housing Growth Partnership; we could not wish for better partners and the funding will secure the delivery of our company’s exciting pipeline of new sites across Sussex and beyond.”

Steve Mountain, Paragon Development Finance Senior Relationship Director, added: “This is an exciting scheme that will bring fresh energy into the centre of Worthing, creating a vibrant mixed-use space of residential homes, retail and leisure. We have a strong relationship with Cayuga Homes having worked with them on two previous schemes; we look forward to seeing this project take shape in the coming months.”

The Southeast continues to be a key region for HGP, where it has invested c. £95 million of equity since 2016, enabling the delivery of c. 1,550 homes.