Places for People sets up joint venture for Edinburgh renewal

One of England’s largest housing associations, Places for People, has set up a joint-venture company for a £13.25m regeneration project in Edinburgh.

Unusually, the development will be almost entirely funded by one bank, Anglo Irish Banking Corporation, which signed a £13m deal two weeks ago.

Places for People and Edinburgh-based developer Burrell have each put in another £125,000. They will own the joint venture, Upper Strand Development.

The company will build 422 flats and houses for sale, 75 affordable and key-worker flats and houses and 670 m2 of retail and commercial space on the site in the next five to six years.

The homes, which overlook the Firth of Forth, are estimated to have an overall sales value of £70m.

Contractor Mowlem will build the home; Places for People subsidiary Edinvar Housing Association will manage them.

Typically, projects of this kind can only get bank loans to cover 70% of their costs. The rest is funded by a joint venture or by a layer of mezzanine debt – unsecured loans on which investors expect a higher return.

Anglo Irish agreed to provide a greater proportion of funding in this case because planning permission has boosted the value of the site, which the bank is using as security.

It provided the loan through its Asset Finance Company.

Ray Hampson, group treasurer of Places for People, said: “Agreed minimal pre-sales and the Edinvar contribution to the affordable key-worker housing has enabled the project to be fully funded by the bank.”

It is understood that Blueroom Properties, Places for People’s market rent subsidiary, is assessing whether to get involved in the project, which would completely eliminate any risk on pre-sales.