M&G to invest €583m in UK affordable housing

M&G will invest the sum over the next 18-24 months via the M&G Shared Ownership Fund, which has agreed a long term, strategic partnership with Hyde Housing to create 2,000 homes in London and Kent - in turn enabling Hyde to recycle capital into other affordable housing initiatives. Investors in the fund will gain index-linked rental income and house price exposure.

M&G Shared Ownership Fund forms part of M&G’s established residential platform and has launched with £215 mln of investment from Cambridgeshire and Northamptonshire Local Government Pension Schemes (LGPS), Homes England - the Government’s Housing Delivery Agency – and two M&G client funds, alongside Hyde.
 Commenting on the launch, Jonathan Daniels, Chief Investment Officer, M&G, said: ‘This is a great example of how M&G is channeling institutional capital – on behalf of pension savers everywhere – into sustainable investments which will make a positive difference to the lives of thousands more people who need good quality, affordable homes.’

The first stage of the partnership has been marked by the Fund’s £61 mln acquisition of 422 homes from Hyde in London and Kent, which will remain in the regulated social housing sector and continue to be managed by Hyde for the long term.
 
M&G’s head of Residential Investment, Alex Greaves, commented: ‘We are determined to play our part in addressing the UK’s housing crisis by providing a mix of housing tenures through our residential capability. Well managed shared ownership is a brilliant first step onto the housing ladder for aspirational home owners and as trusted investors with access to deep pools of client capital, we are fully committed to innovating and improving standards – adding scale and efficiency to the Fund.’
 
Explaining the benefits of investing in the sector from a pension fund perspective, Paul Tysoe, Investment Manager for both the Northamptonshire and Cambridgeshire Local Government Pension Funds, said: ‘For income seeking investors such as pension funds, Shared Ownership offers another means of diversification due to the sector’s low correlation with other asset classes and long-term inflation linked income with exposure to house price growth. Having invested in M&G’s UK Residential Property Fund since 2017, we have the comfort of its track record, expertise and ESG credentials and we welcome the positive social impact that this new fund represents.’
 
Peter Denton, chief executive officer of the Hyde Group, added: ‘Hyde, like all housing associations, faces multiple funding challenges to ensure our homes are safe, decent and sustainable. It is imperative that we find new sources of funding and partners that are committed to environmental, social and governance (ESG) outcomes, to ensure that we can continue to build the new homes that are so desperately needed while also investing in our existing properties. The shortage of affordable homes is still real, significant and urgent and we owe it to our future customers to continue to build new homes, despite competing demands on our money. In M&G we have chosen a partner who shares our values and social purpose. M&G is focused on environmental sustainability and social value, and we believe that together we will drive innovation in product and customer service, helping us to keep improving our shared ownership offer.’