Legal & General Capital is launching a modular housing construction business and has beefed up the leadership of its residential arm to ramp up its PRS activities.
The expansion comes alongside its £600m tie-up with Dutch pension fund PGGM, through which it will buy and develop PRS assets.
The new modular construction arm is at an early stage, but will help speed up work on planned schemes.
“We think there is a fantastic opportunity to disrupt the construction sector and the way it works,” said James Lidgate, director of housing at Legal & General Capital, who will head the new PRS team (see box).
The new joint venture will focus predominantly on schemes of 200 to 500 homes but can take on projects of up to 1,000 flats.
The £600m will fund the development of schemes that, once completed, will be transferred to a separate residential fund. L&G will develop the sites using balance sheet capital, which means that no annuity or pension fund cash will be used to take on development risk. The initial pot will be recycled to develop more sites.
The partnership is seeded with assets in Manchester and Walthamstow, E17, along with LGC’s latest acquisition, ND7 in Bristol, which is the first PRS deal to complete in the city.
The cleared site has been sold by Squarebay and has permission for 168 homes. LGC
will resubmit plans for a purpose-built rental development with a potential end value of more than £50m.
Alder King advised the vendors; Lambert Smith Hampton advised LGC.
New leadership
James Lidgate, head of residential at Legal & General Property, has been promoted to director of housing at Legal & General Capital.
Stephen Murden joins as development manager. He was previously director of residential development at CBRE.
Mike Powell, previously land manager at Barratt Homes, will take on the role of transactions manager.
Dan Batterton, currently head of product development at LGIM, will be fund manager for the new residential fund.
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