Pension funds Legal & General, PGGM and Nest have teamed up to build a £1bn private rented homes partnership.
Initially backed with £350m of combined investment, the new partnership aims to build on L&G and PGGM’s existing joint venture, by incorporating Nest into the scheme.
Nest chief investment officer Elizabeth Fernando said: “We have been carefully considering the UK market and where best to invest so that we can help boost our members’ pensions and support economic growth.
“We can see there is a critical shortage of housing supply, coupled with increasing demand for high-quality rental homes. By building more properties, we can extend to our members a great investment opportunity while helping to meet this demand and bolster the rental market.”
She added: “L&G and PGGM have already been successfully investing in UK build-to-rent sites, giving us confidence that this is a tried and tested approach we will now be extending to Nest members.
“This is a great deal for our 13m members and the UK. By also drawing in international investment from PGGM, we are amplifying our impact and providing much-needed residential properties across the UK.”
L&G and PGGM have been investing together in UK BTR schemes through their Access Development Partnership joint venture since 2016. Since then, L&G has deployed more than £3bn into the BTR sector, delivering more than 10,000 rental homes.
L&G group chief executive António Simões said: “With an inherent supply and demand imbalance, there is a big gap to fill – and thus a need to drive up the delivery of all homes, across all tenures. Institutional investment has an important role to play, and we expect investor demand in the UK’s build-to-rent sector to continue to grow.
“The launch of ADP in 2016 was the catalyst that has enabled L&G to deliver 10,000 high-quality rental homes across the UK’s city centres. We are therefore delighted to re-capitalise with PGGM and welcome a new co-investor in Nest. Thanks to this commitment, we are not only accelerating delivery but also unlocking DC pensions access to the investment opportunity within the residential sector. It’s a strong step forward in putting pensions to work.”
Dirk Bootsma, senior investment manager of private real estate at PGGM, added: “This new partnership with L&G and Nest fits perfectly in our PGGM strategy to realise sustainable, high-quality mid-segment rental homes in the UK.
“This investment not only generates stable financial returns for our client PFZW, the Dutch pension scheme for healthcare workers, it also contributes to relieve a stressed housing market which poses a huge challenge to key workers. For PFZW, investments in sustainable real estate contribute to reaching its climate impact goal to reduce the equivalent of 15 megatonnes of CO2 by 2030 through measurable impact investments.’’
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