The Broadwood Later Living Sustainable Construction Finance Fund has initial capacity for £100m of gross lending, with seed capital provided by Aviva Investors Climate Transition Real Assets Long Term Asset Fund (LTAF).

The strategy will provide finance for the development of new care homes and later living residential properties.

Development loans covering up to 90% of costs will be provided, with 75% of value. To gain funding, developers will need to demonstrate their properties meet - or exceed - energy use targets and that the development will promote environmentally sustainable construction.

Broadwood expects this fund to be just under half deployed by the end of 2024. The intention is to grow the fund with further third-party investments in the first half of next year.

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Ben Sanderson, managing director of real estate at Aviva Investors, will join the fund’s board. Meanwhile, Luke Layfield - portfolio manager of the LTAF - will sit on the fund’s credit committee.

Dan Smith, CEO of Broadwood, said the fund was seeking to target the “indisputable demographic shift” taking place in the UK.

“We have a rapidly aging population and do not currently have the infrastructure to support it,” he said. “With future later living accommodation requirements unlikely to be delivered via the public purse or from traditional lenders, we need to look at more creative ways of providing essential capital to developers.

The Fund does exactly this and not only offers investors access to a credit strategy delivering attractive risk adjusted returns, but also to a strategy which is promoting the climate and social agendas.”