£1bn BTR partnership targets Manchester
Nest, Legal & General, and PGGM are still finalising locations for their joint venture, but Place has been told that brownfield sites in the Northern city are being considered.
Nest, one of the largest pension schemes in the UK, announced today that it had joined Access Development Partnership, a BTR investment programme that was formed in 2016 by Dutch pension fund PGGM and Legal & General.
The three groups have now committed a combined £350m for the latest round of the venture, with an ambition to grow the ADP portfolio to £1bn.
Manchester and Birmingham are two of the cities that ADP is targeting for this second phase of investment. Locations lined up for ADP are all supposed to be brownfield sites, with the build-to-rent projects to be net zero in operation by 2030.
Projects that will secure funds from ADP will include integrated, on-site affordable housing, with those residents having full access to the same amenities as those who rent at a market rate – including coworking areas lounges, gyms, and cycle storage.
The schemes will also include long-lease opportunities
When the BTR developments are complete, L&G’s asset management team will manage them on behalf of the PGGM and Nest members. A quarterly summary will be released to show how money from ADP has been invested, providing transparency for those who are part of the PGGM and Nest pension schemes.
Nest currently manages £43bn of assets on behalf of its 13m members. The scheme’s chief investment officer, Elizabeth Fernando, shared more about the pension fund’s decision to hop into the BTR scene.
“We’ve been carefully considering the UK market and where best to invest so that we can help boost our members’ pensions and support economic growth,” she said.
“We can see there’s a critical shortage of housing supply, coupled with increasing demand for high-quality rental homes,” Fernando continued
“By building more properties, we can extend to our members a great investment opportunity while helping to meet this demand and bolster the rental market.”
Fernando also noted that the past success that L&G and PGGM have had in investing in BTR gave the firm more confidence about entering the market.
António Simões, group chief executive of Legal & General, added: “The launch of ADP in 2016 was the catalyst that has enabled L&G to deliver 10,000 high-quality rental homes across the UK’s city centres.
“We’re therefore delighted to re-capitalise with PGGM and welcome a new co-investor in Nest.
“Thanks to this commitment, we are not only accelerating delivery but also unlocking DC pensions access to the investment opportunity within the residential sector. It’s a strong step forward in putting pensions to work.”
That “putting pensions to work” remark of Simões harkens back to the government’s push for pension funds to invest more to boost the country’s economy.
Minister for pensions Emma Reynolds said: “I am delighted that Nest is harnessing the financial power of pensions to deliver more of the homes this government has pledged to build, which also serves as an excellent investment opportunity for future pensioners in their scheme.
“The government’s landmark pensions review seeks to unlock billions of pounds of investment in the UK economy and drive pension capital into long term growth assets to make every part of Britain better off.”
