UK local authority Lambeth Council has backed Invesco Real Estate’s UK Build to Rent (BTR) strategy with a £42m (€47.6m) investment.
The Invesco Real Estate UK BTR’s strategy was launched in 2014 when the company made its first UK private-rented sector (PRS) investment on behalf of a UK local authority pension fund.
Lambeth Council now joins a growing number of investors, including several local authorities and investors from Australia, Canada, Switzerland and The Netherlands in the strategy that now has in excess of £350m, Invesco said.
The UK BTR’s strategy invests in large-scale opportunities in recognised locations, within proven letting markets.
“By having a strong reputation, experienced team and track record as well as working directly with contractors and developers, the strategy is able to source off-market opportunities, which Invesco Real Estate believes can be an important differentiator in the sector,” it said.
Through this strategy, Invesco Real Estate has to date committed to 10 investments in the UK, with six in regional towns and cities.
The strategy currently holds 1,700 units in total, including those under construction, for a total investment of around £425m, it said.
Andrien Meyers, the head of treasury and pensions at the London Borough of Lambeth Pension Fund, said: “Following our investment strategy review the Lambeth Fund has set aside £42m for investment in UK private-rented sector.”
Meyers said the Invesco offering allows the Lambeth Fund to complement its exposure to European Commercial property; whilst continuing to address its objectives of diversification and inflation protection.
“Further as the Fund is projected to be in negative cash-flow over the next six or so years, the need for income to pay benefits will be also be addressed. The offering is also future proofed with regards to the government’s pooling agenda.”
Simon Redman, the managing director and global head of product management at Invesco Real Estate, said: “Lambeth share our assessment of the attractive properties of this growing sector in the UK, including its low correlation with commercial real estate, equities and gilts; its long-term return profile; the relative stability of income the sector may offer and the potential diversification benefits it can provide as part of a mixed-use portfolio.”
Alex Millar, the head of UK Institutional at Invesco, said: “Winning this mandate is a real testament to the depth and strength of Invesco’s offering and a further example of our ongoing commitment to the LGPS sector through the combined efforts of our Institutional sales and real estate teams.
“We believe UK PRS provides LGPS funds with a stable long-duration income profile, diversification benefits as well as supporting a UK wide need for housing infrastructure”