Co-op’s pension scheme has awarded PGIM Real Estate a £50m (€56.09m) mandate to invest into UK social and affordable housing.
The £11.26bn Pace DB said it has hired the property investment business of global asset manager PGIM to develop the portfolio over the next 12 months.
The $69.2bn (€61.43bn) manager has been appointed to develop the portfolio as part of its inflation-linked property holdings.
Pace said an initial investment in 50 units at the Fair Acres development, in Dunbar, Scotland, is being made, which upon completion, will be let to East Lothian Council. PGIM Real Estate has also secured 48 units in Glasgow and 71 units in Yorkshire, and are actively pursuing developments across the UK.
The £50m investment will eventually provide 350 units, the consumer co-operatives scheme said.
Allan Leighton, Co-op chair, said: “The decision by the Pace trustees to invest in the social housing sector illustrates the strength of the pension scheme and a positive will to invest in an area clearly in need of support.
“If this approach could be adopted more broadly across the pension fund industry, then the current supply gap could be narrowed much more swiftly and effectively.”
Harry Baines, the chairman of the board of the corporate trustee of the Pace pension scheme, said: “Our investment strategy aims to meet the needs of our scheme’s members, but in a way that is aligned with the Co-op’s values.”
Baines added that funding social housing developments as part of the scheme’s property portfolio aligns with its responsible investment policy.
“This funding provides a safe and secure investment opportunity for Pace that will benefit our members and at the same time is meeting a clear social need in the UK housing sector today.”
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