The investment provides Hilltop with an immediate opportunity to grow its existing UK residential development finance platform.
UK-based specialist development funding partner Hilltop Credit Partners has secured investment from global real estate multi-manager platform Metropolitan Real Estate.
As part of the agreement, Hilltop will target to deploy up to £300mover the next three years to finance the construction of more than 1,000 new residential units across the UK, with a focus on affordable regional markets with strong supply-demand fundamentals.
The investment provides Hilltop with an immediate opportunity to grow its existing UK residential development finance platform.
An investment of this type is critical to achieving the UK government’s target of delivering 300,000 new homes per year.
Hilltop believes that UK residential development lending has fallen up to 40% since 2008, as high-street banks have withdrawn from the market due to new regulatory capital requirements and the impact of COVID-19.
The UK could therefore face a funding gap of around £200bn that will need to be covered over the next decade in order to achieve the government’s housebuilding targets.
Hilltop is backed by global real estate investment firm Round Hill Capital, and has facilitated the construction of 250 residential units across the UK to date.
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Metropolitan committed around £60m in 2021 to purchase a portfolio of existing development loans across five regions and to continue funding the active pipeline.
Despite the challenging economic backdrop in 2020, UK residential property prices rose at their fastest rate in six years, as strong pent-up demand coincided with a slowdown in the supply of new housing, with more affordable regions outside of London showing the strongest performance.
Paul Oberschneider (pictured), founder and CEO of Hilltop Credit Partners, said: “I’m delighted to announce this partnership, which further establishes Hilltop as a leading player in the UK development lending market.
"Working with Metropolitan Real Estate will bring together our collective experience in real estate and credit to support proven housebuilders in the UK, and to promote greater housing supply.
"This partnership is a validation and recognition of our work so far, and we look forward to growing our lending portfolio across Britain this year.”
Cherine Aboulzelof, managing director and head of Europe at Metropolitan Real Estate, said: "We are delighted to partner with Hilltop Credit Partners and Round Hill on this transaction.
"We are investing with an experienced team in an already seeded, and growing, portfolio of affordable residential loans that provides visibility and proof of concept in attractive locations with quality local sponsors.
"This opportunity provides our investors with access to the UK residential sector with an attractive risk-return profile for our fund.”
