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L&G’s affordable housing fund tops £500m after new commitment from London pension pool
Legal & General (L&G) has raised a further £130m for its affordable housing fund from London’s Local Government Pension Scheme (LGPS).
These new investments bring the total raised as part of a second close of the fund to £510m.
London CIV, the investment pool for London LGPS, invested £110m, while Access Pool, a group of 11 local authority pension schemes with assets totalling £40bn, has invested a further £20m.
Social impact investor Better Society Capital also contributed £10m, L&G said.
The London pension schemes, which cover all the London boroughs and the City of London, have combined assets of £50.8bn. London CIV includes 20 funds that invest in public markets and eight that invest in private markets.
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Access previously invested £125m in the fund when it launched in July last year. Two weeks later, the Greater Manchester Pension Fund (GMPF) contributed £120m.
Earlier this year, the GMPF invested £100m in a new regional arm of L&G’s Affordable Housing Fund, specifically aimed at the Northern LGPS.
Ali Farrell, fund manager, asset management at L&G, said: “The level of interest we have seen in this fund since its inception last year is a testament to the attractive proposition that investors see in contributing to much-needed affordable housing in the UK, while seeking steady inflation-linked returns and positive social impact.”
The funding is expected to deliver around 3,500 to 4,000 homes. L&G also announced that it had seeded the fund with a portfolio of 514 homes and has exchanged contracts on three funding opportunities for affordable housing development.
It expects to have more than 1,000 homes either operational or under construction by Q2 2025.
These schemes will be developed and operated by Legal & General Affordable Homes, L&G’s for-profit provider, which has more than 8,000 homes in operation or development.
Christopher Osborne, head of real estate at London CIV, said the pool’s strategy is “to help increase the supply of good-quality affordable housing in the UK, address an under-served part of the market, and deliver income-driven returns to our partner funds”.
Drew Ritchie, investment director at Better Society Capital, said: “L&G will play a leading role in channelling private capital into affordable housing in the coming years, delivering thousands of vital homes for families in need throughout the UK.
“We’ve relished the opportunity to participate as a challenger and endorser of the fund’s intended social impact. As a market-shaper, L&G can visibly evidence that private capital can be a long-term, sustainable, impact-driven funder of affordable housing. We were keen to back a team and platform sharing that common vision and that are committed to practical measures to help strengthen and reinforce those aims.”
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