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Legal & General targets a further £2.5bn of pension money to invest into BTR, delivering 7,000+ new homes over the next five years
The investments will deliver Build to Rent homes for local communities
16 Feb 2022
Legal & General Retirement Institutional (“LGRI”), a division of the Legal & General Group (“Legal & General”), today announces that it targets to invest £2.5bn of Defined Benefit (DB) schemes’ retirement funds into Build-to-Rent (“BTR”) schemes over the next five years, which will create around 7,000+ new homes.
LGRI invested over £500 million in 2021 on the development of four BTR schemes in Stratford, Hove, Southampton and Lewisham, which will create over 1,300 new homes for the local communities. The first residents are expected to move into the Hove and Southampton developments in 2024.
LGRI invest with the support of Legal & General Investment Management Real Assets (LGIMRA), which is one of Europe’s largest institutional asset managers and a major global investor. LGIMRA is one of the largest investors into BTR and has already invested c£2.5 billion into twenty BTR schemes around the UK, with 2,700 apartments already operational and a further 6,000 under construction.
Legal & General’s well established BTR platform directly develops and works alongside third parties to create best-in-class BTR schemes, which help to tackle the UK’s housing crisis by using pension funds to deliver thousands of new homes. Crucially, the housing provision is part of Legal & General’s plans to regenerate derelict, unused sites in the UK’s towns and cities to deliver economically and socially useful assets. Through these investments, spread across the UK, Legal & General further demonstrates the principle of “Inclusive Capitalism” which supports the Government’s “Levelling Up” agenda.
The BTR apartments are designed with a focus on lifestyle and resident satisfaction, ensuring quality, operational efficiency, and long-term environmental sustainability that meet the needs and aspirations of residents.
To align with Environmental, Social and Governance (ESG) commitments, LGIMRA adhere to the standards set out by the London Energy Transition Initiative (LETI) and the UK Green Building Council (UKGBC) outlined in its report, “The future of Build-to-Rent in a net-zero world”. This includes reducing carbon emissions associated with construction and using renewable energy. All Legal & General BTR units are targeting Net Zero Carbon in operation by 2030.
Legal & General’s report “The Power of Pensions”, published in 2020, highlights how DB pension money can be used to plug the UK’s £1 trillion infrastructure gap over this decade. The report states that investing DB pension funds can create a virtuous circle of older UK savers funding infrastructure assets that provide a public service, increase the productivity of the wider economy and generate the right level of returns for pension members.
Andrew Kail, Chief Executive Officer, Legal & General Retirement Institutional: “Through investing pension funds into BTR schemes, we can invest into developments that contribute to the regeneration of cities all around the country and support the UK economy. Today’s announcement showcases our commitment to creating thousands of high-quality, sustainable homes for communities that need them most. This is Inclusive Capitalism at its best – by investing in the real economy, generating returns to pay pensions and create a better society for us all.”
Dan Batterton, Head of BTR, Legal & General Investment Management Real Assets: “Following successful investments in 2021 and our long-term track record in the development and operation of BTR schemes, we are delighted that LGR’s commitment to expand its investment allows us to grow our mission and have a greater impact on the supply of high quality rental housing in the UK. Within five years, the Legal & General Group will have committed a total of at least £5bn to the sector, providing 15,000 purpose built BTR homes.”
For further information:
Margrit Williams
Director of External Engagement
Legal & General Capital
Notes to editors:
Established in 1836, Legal & General is one of the UK’s leading financial services groups and a major global investor, with £1.2 trillion in total assets under management (as at FY23) of which c40% (circa £0.5 trillion) is international.
We have a highly synergistic business model, which continues to drive strong returns. We are a leading international player in Institutional Retirement, in Retail Savings and Protection, and in both public and private markets through our Asset Management division. Across the Group, we are committed to responsible investing and dedicated to serving the long-term savings and investment needs of customers and society.
As at 7 June 2024, we estimate the Group’s Solvency II coverage ratio to be 224%.
As at 11 June 2024, Legal & General has a market capitalisation of £14.6 billion.
Institutional Retirement works with trustees and sponsoring companies of defined benefit (DB) pension schemes of all sizes to settle their pension obligations and secure scheme members’ benefits, through a full range of buy-ins, buyouts and other de-risking solutions. Our Client Services’ 12-month rolling Net Promoter Score (NPS) is above +70, which is widely regarded as being at a “world class” level. Legal & General is the UK’s longest-standing active bulk annuity provider.
Our UK Retirement annuity book stands at an estimated £86.1 billion at 31 December 2023. Across the group over £30 billion is invested in direct investments that deliver positive social and environmental impacts, such as clean energy and affordable housing. Legal & General provides income and pension security to more than a million retirement customers around the world.
LGIMRA is a division of Legal & General Investment Management (LGIM), one of Europe’s largest
institutional asset managers and a major global investor. LGIM manages £1.29 trillion1 ($1.57tn) in
assets, working with a range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.
LGIM Real Assets has assets under management of £36 billion2 ($43.8bn) and is one of the largest
private markets investment managers in the UK. Investing in both debt and equity and across the
risk/return spectrum, LGIM Real Assets actively invests in and manages assets across commercial,
operational and residential property sectors, as well as infrastructure, real estate, corporate and
alternative debt.
Taking a long-term view in order to future proof our investments, LGIM Real Assets continues to lead the industry in ESG performance, considering all environmental, social and governance issues at asset level as well as portfolio level.
1LGIM internal data as at 30 June 2022. These figures include assets managed by LGIMA, an SEC Registered Investment Advisor. Data includes derivative positions.
2Source: LGIM Real Assets. AUM data as at 30 June 2022.
*at 13 Jan 2023
IMPORTANT INFORMATION
For professional clients only. Past performance is not a guide to the future. The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested. Views expressed are of LGIM as at 12 January 2023. The Information in this document (a) is for information purposes only and we are not soliciting any action based on it, and (b) is not a recommendation to buy or sell securities or pursue a particular investment strategy; and (c) is not investment, legal, regulatory or tax advice. Legal & General Investment Management Limited. Registered in England and Wales No. 02091894. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority, No. 119272.