NatWest pension, L&G, join £4bn housing JV

Legal & General said it has entered a 15-year joint venture partnership with NatWest Pension Trustee Limited (NWPTL) to invest £500 million of equity to build later living communities which will be developed and operated by Inspired Villages.

The whole venture has a gross development value (GDV) of £4 billion.

NWPTL is the trustee of one of the largest pension funds in the UK, the NatWest Group Pension Fund, which has more than 200,000 members and £53 billion of assets.

“Inspired Villages was established by the Inspired management team and Legal & General Capital, Legal & General Group’s alternative asset platform, in August 2017,” said Legal & General.

“As part of the new JV, Legal & General has sold a 50% stake in Inspired Villages’ first 11 sites to NWPTL based on an enterprise value of over £300m, allowing it to reinvest equity back into this fast-growing business and support its future pipeline.

“Inspired Villages currently has six operational villages with 919 residents and four sites under construction.

“With a commitment to back a portfolio of 34 sites — equating to around 5,100 homes, 8,000 residents and an estimated Gross Development Value (GDV) of c.£4bn – it enables Inspired Villages’ to scale its impact in addressing the considerable shortage of appropriate housing for older people in the UK.”

NWPTL has also committed to acquiring all the developed fully occupied villages outright and placing them into an “Operational Fund.”

The developed villages will continue to be managed by Inspired Villages to provide ongoing resident services.

“This has the potential over time to create an investment platform that allows other pension funds to access and invest in the sector via mature assets, allowing UK pension money to be deployed at scale in order to match long term liabilities and back great outcomes for later living and UK society,”said Legal & General.

“With an ageing society, we will soon have more people over 65 than under 18 but do not have the infrastructure, health-spend or social care to support this long-term demographic shift, exacerbated by a shortage of suitable later living options.

“There are now more than 12m over 65s in the UK with this figure expected to increase by 41% to nearly 18m by 2040; however, there are currently only 78,000 later living homes in this country and only around 7,000 new units delivered each year.

“The UK later living sector lags significantly behind international comparisons, accounting for only 0.6% of over-65s living in later living communities in contrast to around 5% to 6% in the US, New Zealand and Australia.

“Operating over long investment horizons and as responsible investors, Legal & General and NWPTL are aligned in their desire to back investments that deliver a positive environmental and social impact.

“Having committed to delivering all new housing stock as operationally net-zero carbon by 2030, Inspired Villages broke ground on its first two net-zero carbon in regulated energy developments earlier this year.”