L&G and M&G raise equity to bolster PRS investment plans

On Wednesday, LGIM revealed that it had raised £170m for a new build-to-rent (BTR) fund.

Initially, the new open-ended fund will help finance the development of new schemes and will invest alongside the £600m BTR partnership launched earlier this year between Legal & General Capital (LGC) and PGGM, the Dutch pension fund manager.

However, over the long term, the fund will hold the completed properties with the aim of generating strong and stable income returns for its investors. One of the first investors in the fund is a client of Aon Hewitt, which made a “major commitment”.

To date, LGIM has committed about £300m to the build-to-rent sector and has more than 1,000 homes under construction or in planning in Bristol, Salford and Walthamstow, north London.

Mike Barrie, director of fund management at LGIM Real Assets, told Property Week that the manager was close to agreeing deals to further expand the portfolio.

“We have at least another three schemes we are coming close to acquiring that would in themselves deploy an equivalent amount [to the £300m committed],” he said.

The combination of the latest fundraising and the partnership between LGC and PGGM means that LGIM now has a total investment capacity for BTR of around £1bn.

Pension fund mandate

The news came after M&G announced on Monday that the Northern Ireland Local Government Officers’ Superannuation Committee (NILGOSC) had committed £100m in what it claimed was one of the biggest pension fund PRS mandates to be awarded in the UK this year.

The fund manager now invests in the PRS on behalf of 13 UK pension funds, including 10 local government pension schemes, and one foreign pension scheme.

David Murphy, chief executive of NILGOSC, said the pension scheme expected to benefit from “steady and healthy returns”.