London CIV, the asset pooling vehicle for the UK capital’s 32 public pension funds, is investing £50m (€58.3m) in UK affordable housing through Octopus Investments.
Octopus Investments said the first close of the Affordable Housing Fund (AHF) will enable more than 500 affordable family and older persons homes to be built across the UK and is the first step towards the fund’s target to fund 5,000 homes in the coming years.
With the latest investment, London CIV has made £150m worth of commitments in UK affordable housing through the LCIV UK Housing Fund this year, following a £100m commitment to CBRE UK Affordable Housing Fund in May.
Dean Bowden, CEO at London CIV, said: “Following extensive due diligence and negotiations on behalf of our partners funds, we are excited for LCIV UK Housing Fund to partner with Octopus Investments and be an anchor investor in Octopus AHF.
“Private capital has a vital role to play in the affordable housing sector, and we are confident that Octopus AHF will deliver robust, long-term returns for our partner funds, and through its impact framework accelerate the delivery of much needed new and quality affordable homes.”
Christopher Osborne, senior portfolio manager at London CIV, said: “We look forward to Octopus AHF driving resilient returns for our underlying partner funds and generating impact through increasing the supply of genuinely affordable and quality homes for some of the most vulnerable members of society.”
Octopus Investments said the UK affordable housing investment fund provides co-investment opportunities for local authorities, local authority pension schemes and other locally interested investors, increasing the total capital available for affordable housing but also driving alignment around the delivery of schemes in their local areas.
Jack Burnham, head of affordable housing at Octopus, said: “We are excited that this initial capital raise will enable us to start working with housing associations to deliver and manage new affordable homes across the country. In creating the fund, we have listened carefully to the needs of the affordable housing sector.
“We know that housing associations are increasingly comfortable using alternative finance routes to build and operate more homes, with half of CFOs in the sector now more likely to work with equity partners compared with just 12 months ago. We think that there is potential for these partnerships to have a seismic impact on the delivery of affordable housing across the country.
Ed Clough, managing director at Octopus Real Estate, said the fund is an evergreen fund that “we will continue to scale for years to come”.
He said: “This means we can support our housing associations partners in providing affordable homes for the long-term, creating stability for both residents and investors.”
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