Legal & General invests Â£225m with Places for People to help build 7,000 new homes.
17 March 2014
Legal & General (L&G) has announced it has secured a portfolio of over 4,000 housing units, let to Places for People Homes on a new 50 year lease, as it continues to grow its role in supporting the UK’s housing needs. Places for People Homes will use the new finance from L&G’s investment to expand the housing stock in the UK by building 7,000 new housing units over the next seven years. The new housing stock will include affordable, private rented sector and owner-occupier accommodation.
The Places for People investment represents the largest direct investment made to date by an institutional investor into the affordable housing sector; L&G has acquired the portfolio for a total consideration of £252 million. The investment by L&G Retirement and managed by Legal & General Capital is part of L&G’s strategy to increase funds allocated to direct investments and infrastructure. These investments provide an excellent match for our long-term annuity and pension liabilities, and supports UK economic growth.
Deputy Prime Minister, Nick Clegg, said: “This is very welcome news to build thousands of new homes for people across the country. Our homes are where we grow up, raise our families and grow old, and it’s vital that Britain continues to build vibrant communities where people can live, work and participate in a stronger economy and a fairer society.”
Paul Stanworth, MD Legal & General Capital, said: “This £252 million, 50 year investment demonstrates the capacity of institutions like Legal & General to help solve the UK’s housing and infrastructure crisis. At the end of 2013 we had £2.9 billion of direct investments in UK infrastructure. Since the Insurance Action Plan was announced three months ago we have made further direct investments of over half-a-billion pounds, including in social and key worker housing and student accommodation. We are developing further potential initiatives in the private rental sector and expect to develop our private placement lending business to SMEs. Implementing the Insurance Action Plan in this way is good for our customers and for the wider economy."
David Cowans, Group Chief Executive at Places for People, said: “The scale of under supply in housing and the need to invest in infrastructure across the UK is central to our determination to develop partnerships with investors like L&G in order to create new consortia to tackle the shortfall in housing construction and free up resources to stimulate innovative investment in the infrastructure required to support it.”
The investment enables Places for People Homes to stimulate new housing delivery over a range of land holdings across the UK with the proceeds raised going towards fast tracking new housing construction and infrastructure works associated with building new communities, such as new schools and roads. The structure of the investment assists in reducing Places for People Homes short term gearing whilst allowing it to build a further 7,000 new homes over the next seven years.
As a long-term provider of investment capital, L&G has invested £5.2 billion in UK infrastructure projects to date and is one of the six UK insurers committed to investing £25 billion in the UK by 2018. The deal represents L&G’s first direct investment into affordable housing and follows its recent announcement that it has agreed a £40 million, 25 year debt facility to Thames Valley Housing Association, enabling it to build over 500 new units of affordable housing.
Pete Gladwell, Head of Public Sector Partnerships at Legal & General Property, commented: “This sizeable investment represents our determination to use institutional capital to achieve a step change in the provision of affordable and social housing in the UK. The innovative structure enables councils and registered providers to unlock capital from their existing portfolios and fund the construction of new homes, whilst providing a long term, sustainable rental stream from which L&G can meet its pension obligations.”
Chris Jones, Tax & Treasury Director at Places for People, commented: “This investment is an excellent example of how it is possible to develop creative financing solutions in order to increase capacity to fast track housing delivery in an economic environment that presents challenges to new public sector funding for housing development.”
Notes to editors
L&G’s Housing Portfolio
The affordable housing portfolio L&G is acquiring is spread over approximately 150 schemes, is principally concentrated in Places for People’s core area of the North West (60% by value), with a further 16% in the South, 10% in the Midlands and 14% in the North East.
Places for People
Places for People was established in 1965, Places for People owns and manages over 148,000 homes and has an asset value of around £3.3 billion.
Legal & General Retirement (LGR)
Legal & General Retirement has been an active participant in the annuity market for over 25 years and provides annuities to over 1 million customers. Legal & General Retirement Business is one of the leading annuity providers in the UK and has expertise in investment management, as well as an in-depth understanding of mortality trends and longevity risk. As one of the leading annuity providers, Legal & General’s aim is to consistently offer our customers competitive annuity rates, which rank in the top 5 of annuity rates available.
Legal & General Capital (LGC)
LGC advises and implements the Group investment strategies for the £43.4bn principle balance sheet. It is the Group’s financial risk management team, managing the principal investment strategy for the Group’s annuity, protection and savings businesses. LGC’s functions include capital and financing management, group treasury and principal direct investments. We work closely with all other group businesses to ensure that our customers’ financial interests are secure.
Legal & General Property (LGP)
LGP is a wholly-owned subsidiary of Legal & General Investment Management (LGIM), one of Europe’s largest institutional asset managers and a major global investor. LGIM manages approximately £443bn in assets on behalf of more than 3,100 clients (30 September 2013) and provides products and solutions spanning all asset classes. LGP is the fourth largest institutional property fund manager in the UK, managing or co-managing 16 separate funds or vehicles and two segregated mandates with an aggregate asset value of £11.9bn as at end of December 2013. These funds include:
Specialist Pooled Funds
The Leisure Fund Limited Partnership; Industrial Property Investment Fund; Arlington Business Parks Partnership; and the English Cities Fund
- Single Asset Vehicles
Bracknell Regeneration Partnership; Central Saint Giles Partnership; Performance Retail Limited Partnership and Warrington Retail Limited Partnership
- Balanced Funds
Life Fund; Linked Pensions; Linked Life; Managed Fund; Property Unit Trust; UK Property Income Fund; LPI Income Property Fund and the Hybrid Property Fund.
LGP’s UK-focused fund manage