UK workplace pension scheme NEST has formed a partnership with Legal & General (L&G) and Dutch pension fund manager PGGM to jointly invest an initial £350m (€419m) in the development of rental homes throughout the UK.
The trio’s new venture, expanding on an existing partnership between L&G and PGGM, expects to invest up to £1bn into developing build-to-rent (BTR) schemes across the country.
L&G and PGGM, which invests on behalf of its pension fund client PFZW, have been collaborating on UK BTR through their Access Development Partnership (ADP) founded in 2016. To date, L&G has invested over £3bn in the BTR sector, resulting in the delivery of more than 10,000 rental homes.
The latest partnership with NEST is for the second phase of the ADP partnership.
Elizabeth Fernando, NEST’s CIO, said: “We can see there’s 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.
“After working with L&G for many years, we’re delighted to extend our partnership into this new area. 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’ll 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’re amplifying our impact and providing much needed residential properties across the UK.”
António Simões, group CEO of Legal & General said: “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’re 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, said: “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 mega-ton CO2 by 2030 through measurable impact investments.’’
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