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Legal & General Enters the Growing Private Rental Sector - Walthamstow

LEGAL & GENERAL ENTERS THE GROWING PRIVATE RENTAL SECTOR - WALTHAMSTOW

 

Legal & General has today announced its first investment in the UK Private Rental Sector (PRS) market and plans to become a major owner of rented accommodation; seeing it as an ideal new institutional asset class for long term investors, and with an appetite to invest up to £1bn in the sector.

 

Legal & General Capital (LGC), the principal investment division of the Group, has acquired an initial £25m regeneration site at Walthamstow in London to build and rent over 300 flats. The accommodation will be a range of 1, 2, and 3 bedroom flats.

 

On completion the rent from the flats will provide an attractive long-term institutional investment return. By investing in projects such as Walthamstow, Legal & General can access a supply of PRS assets and achieve a better match to long-term annuity liabilities than existing fixed income assets, enhance returns across the Group, and provide real economic growth for the UK by creating much needed new housing.

 

Commenting on entering PRS market, Laura Mason, Director of Investments, Legal & General Capital said:

 

“The UK has a chronic shortage of housing. Today’s investment and our future plans for the PRS sector should help address the structural issues which have contributed to the shortage. We view  investments over 30 or more years and are using our long term capital to change the way the UK housing market is financed. This will be the first of many PRS deals for LGC.

 

“PRS fits our investment objectives extremely well. We are creating new assets for Legal & General that generate a long term inflation linked income which is natural fit for our balance sheet. We are exploiting the synergy of our Group’s strong capital base and our expertise in the Legal & General Property residential and development teams to manage the assets on our behalf.”

 

Bill Hughes, Managing Director of Legal & General Property, added:

 

“We consider PRS to be a key part of solving the housing supply crisis.  The sector will enhance economic productivity through providing greater flexibility, as well as providing good value, high quality accommodation. It is essential to us that we focus on purpose-built “build to rent” investments of scale that are capable of delivering management efficiency and a high standard of customer experience.”

 

Housing is critical to the success of the UK, and it is crucial that the housing stock is significantly improved and expanded. Legal & General is active in many parts of the UK housing market. In addition to entering the PRS market, Legal & General build homes to sell; arrange mortgages; provide finance for affordable homes; care homes and key worker accommodation and build-to-lease student accommodation.

 

LGC are responsible for investing the capital of the Legal & General balance sheet, primarily to increase the risk adjusted returns of the assets. LGC is focussed on committing capital to housing more broadly and its investments include CALA Homes, a top ten housebuilder, which recently acquiring Banner Homes.

 

LGC seeks to benefit from synergies from the rest of the L&G businesses and invest directly in “UK plc” through infrastructure and similar investments that require long term capital investment that in turn suits the Legal & General’s capital profile. LGC, over the last couple of years have invested £4.6bn (Q3 2014) in direct investments and infrastructure.

 

The Walthamstow PRS development will be built and managed by Legal & General Property, on behalf of LGC.

 

-Ends-

 

For further information, please contact:

Media:

Richard King               

Head of Group Corporate Communications                                            

020 3124 2095

Olivia Goodall             

LGIM PR Manager                                                                               

020 3124 2777
 

 

Notes to editors:

 

Legal & General Group Plc

 

Established in 1836, Legal & General is a leading provider of insurance, savings and investment management products in the UK. The Group has a market capitalisation of £16.5bn (as at 24 February 2015) and is responsible for investing £676bn worldwide (as at 30th September 2014) on behalf of investors, policyholders and shareholders. We have over seven million customers in the UK for life assurance, pensions, investments and general insurance plans and over one million customers in the US who rely on us for life assurance. In 2013, Legal & General's profits before tax (on the IFRS basis) were £1,134m and earnings per share were 15.20p for the period, an increase of 10% for both respectively.

 

Legal & General Capital (“LGC”) manage the principal investments of the Group.  At 30 June 2014, this included the £5.2bn Group Capital funds together with the remaining £43.0bn principal balance sheet which supports the long term insurance reserves of the insurance entities and provide Group Treasury services across the Group.  In 2013, LGC contributed £179m (14%) to the Group’s Operating Profit.

 

Forward looking statements

Nothing in this announcement should be construed as a profit forecast. This document may contain certain forward-looking statements relating to Legal & General Group, its plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward-looking statements involve uncertainty because they relate to future events and circumstances which are beyond Legal & General's control, including, among others, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory and Governmental authorities, the impact of competition, the timing impact of these events and other uncertainties of future acquisition or combinations within relevant industries. As a result, Legal & General Group's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in these forward-looking statements and persons reading this announcement should not place reliance on forward-looking statements. These forward-looking statements are made only as at the date on which such statements are made and Legal & General Group Plc does not undertake to update forward-looki

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