Legal & General Investment Management Real Assets has raised a further £170m of equity investment from major institutions, including a significant commitment from a client of Aon Hewitt, for an open-ended build-to-rent fund.
The new fund will open up the rental market to long-term pension and institutional investors, and sits alongside £600m of investment by Legal & General Capital and PGGM in 2016.
LGIM Real Assets’ total investment capability for build to rent now stands at circa £1bn. Since the launch of the LGIM Real Assets build-to-rent platform, it has secured over a 1000 homes under construction or in planning within Bristol, Salford and Walthamstow, and has a pipeline of future projects, including Birmingham, Leeds and London.
The built-to-rent strategy will create a portfolio of high-quality, long-term residential assets. It will deliver much needed purpose-built rental accommodation for tenants, and rental income for pension funds to pay their pensioners.
These new homes are required as a result of a nationwide shortage across all tenures, as well as changing social and demographic trends, particularly the way people live and work in urban areas. Building rental housing will also create an important economic stimulus for UK urban regeneration areas, delivering new jobs and growth.
Mike Barrie, director of fund management at LGIM Real Assets, said: “It is very pleasing to attract such significant institutional investment into our Build to Rent platform. We have a housing crisis in the UK, and only with institutional funding can we deliver the new homes the country needs. We have already secured a £1bn in funding, delivering 1000 new homes either in planning or under construction, from a standing start in 2016. We are creating new jobs in the UK, and stimulating economic growth, and in 2017 we’ll also have our first new tenants moving into much needed new homes.”
In January 2016, LGIM Real Assets worked with Legal & General Capital, the group’s principal investment arm, and PGGM, the Dutch pension fund, to build an initial 3,000 homes for rent across the UK.
James Lidgate, director of housing at Legal & General Capital, said: “Legal & General is active in all parts of the housing market: build to rent, build to sell, student accommodation, modular construction, building new housing communities, and we’re also looking at purpose-built retirement housing. There is a shortage in all types of housing tenure in the UK, and Legal & General Capital will deploy long-term investment capital with external partners, or with LGIM Real Assets to deliver modern, energy efficient, homes.”
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