National Employment Savings Trust, London, has partnered with Legal & General Asset Management and PGGM in a deal aiming to collectively invest up to a £1 billion ($1.3 billion) in the U.K. build-to-rent sector.
The partnership is initially backed by a £350 million combined investment, according to a Sept. 23 news release.
The deal builds on the existing Access Development Partnership joint venture between L&G, which has £1.22 trillion in assets, and Dutch pension fund manager PGGM, with €243 billion in AUM, that was launched in 2016. The second phase with NEST will also support the U.K government’s target of delivering 1.5 million homes across the country.
Build to rent is a subsector of the private rental sector in the U.K with an estimated value of £30 billion, roughly 2-3% of privately rented properties in the U.K.
Elizabeth Fernando, Nest’s chief investment officer, 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.
“By also drawing in international investment from PGGM, we’re amplifying our impact and providing much needed residential properties across the U.K.”
Emma Reynolds, minister for pensions for the U.K government, welcomed the partnership as an example of how pension funds can support U.K. economic growth. In July, the U.K. launched a pension review to boost investment and increase U.K. savers' returns.
NEST pension fund manages £43 billion assets on behalf of a third of the U.K. workforce.
