Image: www.kierliving.co.uk
Kier is set to build 5,400 homes across the country over the next 10 years as part of a joint venture with Homes England and developer Cross Keys Homes.
The JV will allow Kier to make use of its residential land bank through what it calls a "capital efficient model".
It said the deal would allow it to increase the scame of its mixed tenure house building activities by around 500 units per year by 2020.
Kier will hold a 69% stake in the JV, while Homes England has 26% and Cross Keys Homes 5%.
Kier will receive £27m in respect of its initial contribution of four development sites, which will be financed by a loan to the JV from Homes England.
The JV partners will contribute £47m of equity funding in proportion to their economic ownership.
The partners are also in negotiations with lenders who could provide up to £80m of extra investment for the development of future schemes by the JV.
Kier chief executive Haydn Mursell said: "This joint venture is an important milestone, bringing Homes England, Cross Keys Homes and Kier together in a new strategic partnership which will help address the national housing deficit.
"As joint venture partners, we have a shared ambition to work collaboratively to build more affordable homes across the country."
Nick Walkley, chief executive for Homes England, added: "At Homes England, we’re using our finance, land and expertise to build more homes in areas of greatest need.
"Our innovative deal with Kier and Cross Keys Homes shows how we intend to form new commercial partnerships to increase housing supply, address affordability issues and generate value for the public purse."
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