PGIM Real Estate has launched a £250m affordable housing fund with a group of UK local government pension schemes.
The UK Affordable Housing Fund’s initial fund raise has reached £190m, giving it £250m to spend including leverage. The fund will target a total return of 6-9% per annum by investing in and developing affordable homes across the UK. It will be managed by Paul Dennis-Jones, senior portfolio manager at PGIM Real Estate, and head of UK transactions Charles Crowe.
The venture has been established with the Northern LGPS, which pools the pension funds for Greater Manchester, Merseyside and West Yorkshire, and the Brunel Pension Partnership, which brings together pension funds covering Avon, Buckinghamshire, Cornwall, Devon, Dorset, the Environment Agency, Gloucestershire, Oxfordshire, Somerset and Wiltshire.
The fund is the first of its kind for PGIM Real Estate, which has to date focused on partnerships and closed mandates. Since 2016 it has grown portfolios in Hull, Reading, Southampton, Dunbar, Glasgow and South Yorkshire.
Crowe said: “With a major supply/demand imbalance within UK affordable housing, PGIM Real Estate’s strong track record in this space provides a mutually beneficial opportunity for working people and families in the UK, as well as for income-focused investors.”
Ged Cooney, chair of Northern LGPS, said: “The UK has a severe housing shortage which urgently needs to be addressed. Patient long-term capital such as ours is well placed to help address this issue.”
Vanessa Jacka, investment principal at the Brunel Pension Partnership, added: “The fund is intent on encouraging better practices, both environmentally and socially, in a housing sector where provision has historically been fragmented.”
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