Legal & General has secured a further £150m in commitments for its UK affordable housing strategy, bringing total commitments to the L&G Affordable Housing Fund to £280m.
The bulk of the capital has come from Local Government Pension Scheme funds, which have committed £120m alongside internal client capital.
L&G’s strategy will invest in well-designed, purpose-built social rent, affordable rent and shared-ownership housing in areas of acute need and demand across England. It aims to work alongside councils and other providers in response to recent policy announcements and those due in October.
The fund will focus on “equity and affordability” as its core social priority. The homes will align with L&G’s commitment to achieve net zero carbon by 2050 or sooner. The pipeline consists of new-build, energy efficient affordable housing stock, more than 95% of which has an EPC rating of B or higher.
The fund has a strong pipeline of new homes via L&G Affordable Homes. It will operate a direct leasing model for greater control, high-quality customer service and to reduce counter-party risk. It will be managed by L&G’s asset management division.
Ali Farrell, fund manager, asset management division, said: “Reaching £280m, following a further £150m of investment, marks an important step forward in how we direct long-term pensions capital into unlocking more homes across the UK.
“L&G’s enduring commitment to the housing sector reflects the opportunity for institutional investors to not only secure steady, inflation-linked returns, but also the opportunity to make real-world impact. We’re proud to have created an investment vehicle to facilitate this – helping to meet our clients’ needs as well as aiming to deliver societal benefit.”
Laura Mason, chief executive, private markets, asset management division, added: “Today’s announcement demonstrates the important role pensions capital can play in investing in tangible assets that we believe can benefit the real economy while seeking to deliver positive societal outcomes. With acute demand for affordable housing across the UK and with government signalling the delivery of more affordable homes as a top priority, the public and private sector need to work together to drive change, and institutional investment has a pivotal part to play.
“Our evolving partnership with Greater Manchester Pension Fund is testament to this, as well as the strength of the platform we have created to utilise L&G’s catalytic balance sheet capital in investment opportunities for our clients.”
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