Canada Pension Plan Investment Board (CPP Investments) has committed an initial £500m (€600m) to a newly established UK single-family rental housing investment venture formed in partnership with Kennedy Wilson.
The C$647bn (€434bn) Canadian fund will hold a 90% interest in the venture, while Kennedy Wilson will commit £56m to become a 10% shareholder and will target new-build housing stock.
The partnership – with an initial target asset value of approximately £1bn including leverage – has been seeded with properties from two developments sourced by Kennedy Wilson. The seed assets comprise units currently under construction by Barratt Redrow in Norwich.
Kennedy Wilson, which will manage the venture and earn fees, has a pipeline of investment opportunities valued at over £360m and comprising 1,100 units. The company has the capacity to expand this pipeline to reach 4,000 units upon full capital deployment.
Tom Jackson, head of real estate for Europe at CPP Investments, said: “Private capital can play an important role in addressing the current undersupply of high-quality rental housing in the UK, particularly where it is professionally managed to provide a great customer experience.
“Investing into the UK single-family housing sector aligns well with our broader real estate strategy, to undertake scalable investments into high quality assets with growing cash flows.”
Mike Pegler, president of Kennedy Wilson Europe, said: “The structural challenges facing institutionally managed rental housing in the UK provides a clear investment rationale to enter the market and leverage our deep experience in the sector.
“We are actively seeking opportunities to grow our portfolio, which offers substantial scalability potential in the UK, driving consistent risk adjusted returns in this high-conviction subsector.”
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