Australian property and infrastructure group Lendlease and Canada Pension Plan Investment Board (CPPIB) have launched a UK Build-to-Rent investment partnership, with an initial target to invest £1.5 bn (€1.7 bn) in the sector.
The partnership will begin with an investment of £450 mln in the next phase of new homes, which will be for private rent, at Lendlease’s £2.3 bn Elephant Park development in Elephant & Castle.
CPPIB will invest £350 mln for an 80% stake and Lendlease will invest the balance.
The investment is in addition to the £800 mln that Lendlease has already committed to housing and infrastructure in the development and will accelerate the delivery of private rental and affordable homes.
Construction has already commenced, and the first homes in this phase are expected to be completed in 2020.
Further to this initial investment, the partnership will also pursue opportunities within Lendlease’s wider residential urban regeneration activities in London and across the UK under a 50:50 joint venture.
Lendlease will develop, construct and manage the Build-to-Rent homes on behalf of the partnership. The firm is behind some of London’s largest mixed-use regeneration projects such as Elephant & Castle and The International Quarter.
'In recent decades, structural shifts in the housing market have meant that demand has outstripped supply in the private rented sector, leading to a shortfall of homes in London and across the U.K,' said Dan Labbad, CEO of International Operations at Lendlease. 'Today’s announcement is a logical next step for us as a business and delivers on our strategy to grow our urban regeneration pipeline and accelerate the delivery of much-needed homes, by working with institutional capital partners to launch this new asset class for Lendlease’s investment platform.'
Andrea Orlandi, Managing Director, head of Real Estate Investments Europe at CPPIB, said: 'This investment is a great opportunity for CPPIB to further diversify our European real estate portfolio, while at the same time addressing a need in the UK. Through this partnership, we are able to access a sector we believe is poised for long-term growth, and we are pleased to be able to do so with Lendlease, one of our existing top global partners.'
CPPIB is also invested in Lendlease International Towers Sydney Trust which holds a number of office towers at Barangaroo South in Sydney.
