L&G agrees £350m partnership with UK and Dutch pension providers to build rental homes

The partnership builds on L&G and PGGM’s existing joint venture, Access Development Partnership (ADP), which was launched in 2016 to increase the delivery of rental homes and “drive stable returns for institutional investors”.

Nest’s involvement marks the second phase of ADP. Locations have been lined up on brownfield sites in city centres and all new rental schemes will target net zero in operation by 2030, the organisations said.

L&G will work with local authorities on the provision of affordable housing.

“It is important to L&G and Nest that this housing is integrated into the development and has access to the full facilities of the site,” it said.

Once the homes have been built, L&G’s asset management division will manage the properties.

Elizabeth Fernando, chief investment officer at Nest, said: “We can see there’s a critical shortage of housing supply, coupled with increasing demand for high-quality rental homes.

“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.”

Ms Fernando added that Nest had taken confidence from L&G and PGGM’s ongoing investments into UK build-to-rent sites.

“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,” said António Simões, group chief executive of L&G.

Mr Simões added that the announcement was “an important milestone for L&G’s ambitions in private markets and crowding in third-party capital”.

Dirk Bootsma, senior investment manager, private real estate at PGGM, said: “This investment not only generates stable financial returns for our client PFZW, the Dutch pension scheme for healthcare workers, it also contributes to relieve a stressed housing market which poses a huge challenge to key workers.”

Mr Bootsma noted that the investment also contributes to PFZW’s carbon reduction goal.

Earlier this year, L&G launched a new affordable housing fund with £125m of investment from local government pension schemes.

The fund quickly grew with a £120m investment from the Greater Manchester Pension Fund, the UK’s largest local government pension scheme.

In August, L&G’s suburban build-to-rent platform and Vistry Group signed a £40m deal to bring forward 147 new properties in Coventry.

Last week, L&G announced the sale of house builder Cala Homes for more than £1bn, six months after the firm reported falling profits.