Pension Insurance Corporation (PIC) is investing in affordable housing in UK’s capital as part of a newly created partnership with residential developer London Square.
The specialist insurer of defined benefit pension funds is investing £50m (€57.3m) to develop 125 affordable and shared ownership homes, funded with a combination of internal debt and equity.
The development on the former Hawks Road Health Clinic site in Kingston upon Thames, Surrey, was made possible through a £4.9m grant from the Mayor of London’s affordable housing programme.
PIC said London Square is acting as contractor/developer, with Square Roots as the affordable provider. The development is expected to be completed in November 2025.
The deal is PIC’s first investment as part of a long-term partnership with London Square as well as its first equity investment in affordable housing, helping diversify its investments in a sector in which it has invested almost £4bn of debt since 2012.
PIC said it expects to invest £500m over the coming years to develop affordable homes to “help alleviate the housing shortage in Greater London, whilst providing cash flows to back the pensions of PIC’s policyholders”.
Allen Twyning, investment director at PIC, said: “We are excited to be partnering with London Square and Square Roots on this development and our inaugural equity investment in social housing. We are also delighted that a grant was secured from the GLA [Greater London Authority] affordable housing programme that has made the overall scheme viable, given the high-interest rate environment, and inflated building costs.
“Not only does this create secure, low-risk cashflows with which we can pay the pensions of our policyholders pensions, but it creates huge social value in Kingston upon Thames.”
Adam Lawrence, CEO of London Square, said: “Our new partnership with long-term investor PIC is excellent news for London Square and Square Roots, enabling us to deliver another 100% affordable scheme, making an important contribution to the housing shortage, and creating homes and communities of the highest quality in a well-connected location where people will choose to live.”
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