Pension fund manager invests £40m in affordable housing strategy
LGPS Central has announced a £40m investment in PGIM Real Estate’s UK Affordable Housing strategy.
The funds, coming from its UK Residential Indirect Property Partnership, will boost PGIM’s strategy to acquire single-family homes for affordable rent, targeting working families and co-renters to address the growing need for housing in the UK.
PGIM Real Estate is the $210bnn real estate investment firm of PGIM and the third largest real estate firm globally.
Its focus is on providing homes that meet environmental standards and make a positive social impact, and targets new and low-rise homes located near schools, jobs, and leisure facilities on the outskirts of towns and cities.
LGPS Central now has more than £30bn of assets under stewardship for eight local authority pension funds across the Midlands. It’s seen its pooled private markets strategies surpass £5bn, with 25% of currently invested private market capital in the UK.
The asset management and its Partner Funds have secured seed commitments from Cheshire, Derbyshire and Staffordshire Pension Funds for the investment.
Mike Hardwick, investment director for Property at LGPS Central, said: “We are thrilled to confirm our first investment from the UK Residential Indirect Property Partnership into the PGIM Real Estate’s UK Affordable Housing strategy. This investment underscores our commitment to achieving robust investment returns for our Partner Funds whilst also addressing the critical need for affordable housing in the UK.
“PGIM were chosen due to their investment approach aligning with our own in ensuring that the investments contribute positively to society and the environment. We believe that PGIM Real Estate’s expertise and proven track record make them the ideal partner to help us deliver high-quality, energy-efficient homes that can make a real difference to communities across the country.”
Oscar Kingsbury, portfolio manager of PGIM Real Estate’s UK Affordable Housing strategy, said: “We are delighted at LGPS Central’s commitment to our UK Affordable Housing strategy. At a time when UK household budgets have become increasingly squeezed against the backdrop of a housing crisis, we are pleased to be able to increase the supply of affordably let and energy-efficient homes into the sector.
“We feel that the market is at an important inflexion point. Whilst there remains significant demand for affordably let single-family housing, there is continued uncertainty in the wider new-build sales market which is creating buying opportunities, at a time when borrowing costs are falling. Therefore, we welcome LGPS Central’s important commitment, to enable the strategy to grow at this time”.