The London CIV UK Housing Fund, the open-ended vehicle backed by the local government pension scheme (LGPS) has committed to CBRE Investment Management’s UK affordable housing fund.
Back in February, the Lambeth Pension Fund, one of the UK capital’s 32 LGPS that make up the London CIV asset pooling company, invested in the London CIV UK Housing Fund, which at the time said it was planning to raise over £250m (€289m) in its first close in the coming weeks.
The London CIV UK Housing Fund’s investment will include general needs social and affordable housing, specialist housing and transitional supported housing, London CIV said at the time. It added that the fund expects to complete its first deal in the second quarter of the year.
In the latest update, London CIV said following the first close of the London CIV UK Housing Fund on 31 March 2023, CBRE UK Affordable Housing Fund (CBRE UK AHF) has been selected as the first investment, with a formal close into CBRE UK AHF on 5 May 2023.
Dean Bowden, CEO of London CIV, said: “Affordable housing offers attractive characteristics including income that typically tracks inflation, high occupancy and low void rates, and low correlation to other real estate sectors.
“It also offers resilience across market cycles and is less sensitive to changes in the economy, as we saw during the pandemic.”
Christopher Osborne, senior portfolio manager of London CIV, said: “We are delighted to have launched the Housing Fund and to have invested into CBRE UK AHF; this represents a compelling opportunity to partner with a ’best in class’ team and experienced manager (CBRE IM) in the affordable housing space.
“Following a robust due diligence process, we look forward to CBRE UK AHF driving resilient returns for our underlying client funds and generating impact through increasing the supply of genuinely affordable and quality homes for some of the most vulnerable members of society.”
Andrew Davey, the head of liability-aware strategies and affordable housing at CBRE IM, said: “It became apparent throughout a comprehensive due diligence process that our approach to impact investment and affordable housing was closely aligned with the values and targets of London CIV, so this partnership is very exciting.
“We are both committed to addressing key societal and environmental issues, and we hope to build on our track record with existing LGPS investors to work together with London CIV to make a meaningful impact and achieve their financial goals.”
Earlier this year, UK local authority pension funds Tyne and Wear Pension Fund and Scottish Borders Council Pension Fund backed CBRE UK AHF, taking the fund’s total equity commitments to more than £500m.
At the time, CBRE IM said AHF’s backers comprised 23 investors, nine of which are LGPS.
The fund – which invests in social and affordable rented housing and affordable-ownership properties – has a pipeline of £400m of schemes both in development and completed, CBRE IM said in February this year.
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