Specialist debt and equity advisory firm Arc & Co. has completed a £16.4 million development funding deal to support the construction of a new 70-bed care facility in Fareham, Hampshire.

The three-year facility, structured by Cameron Hayes, director at Arc & Co., will finance the full development cycle of the premium care home, with an option to extend the term once the project becomes operational.

The funding was secured through a UK challenger bank, marking the lender’s first foray into care home development and reflects the growing institutional interest in the care sector as a long-term asset class.

Delivered at a loan-to-value ratio of 85% on a turn-key basis, the deal also rises to 65% of net investment value, underlining the lender’s confidence in both the viability of the scheme and the developer’s ability to deliver.

The facility has the additional benefit of a pre-let agreement to an established operator, ensuring that the finished home will be launched with a full-service model already in place.

The scheme is positioned as a premium 5-star offering and is expected to set a new standard for high-quality care provision in the region.

Cameron Hayes said the transaction underscored a shift in investor sentiment. “This transaction highlights the increasing institutional interest in the UK care sector, which has lagged behind other markets like Canada, New Zealand, and Australia in terms of investment appetite and the overall quality of care,” he said.

“The UK has an ageing population and requires care facilities that are fit for purpose, and which align with the long-term fundamentals of not growing obsolete from an investor perspective. It is great to be part of this process in a growing area of the market.”