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Legal & General invests in high-quality, long-term assets and partners with leading organisations to build a better society and create jobs, while also making a profit for shareholders. Most partnerships that we take part in are 10 years or longer and are based in cities across the UK.
For example, the ID Manchester scheme will last 15 years and is part of the Bruntwood SciTech collaboration, which develops life science and innovation hubs. The Oxford University joint venture is an example of an even longer-term urban regeneration project, aiming to last decades. By addressing infrastructure needs in the city, this scheme will help Oxford University and the city of Oxford thrive for years to come.
These projects can transform lifestyle and technology. They are an example of an innovative ecosystem which gives plenty of opportunity for people to collaborate.
In the Bruntwood SciTech’s report Place Matters: Innovation and Growth in the UK, successful innovation relies on ‘The Power of Three’, an innovation district, an innovation ecosystem and a place ecosystem. This means the cities of the future need to contain an environment where businesses can come together and support each other. However, they also need the leisure and cultural elements that will make them great places to live.
Reasons for urban regeneration
We have been investing in the built environment and society’s infrastructure needs since our inception in 1800s. In the modern era, there has been a need to level up our towns and cities across the UK. We made some of our first investments in Cardiff over 25 years ago… and have invested into the built environment and infrastructure projects for a long time.
As long term investors, we believe partner with local councils across the UK to help the Government build back better, and believe that the right investments can help create a more inclusive post-pandemic society. We’ve already invested £1.5 billion since the first lockdown. It “feels like policy is coming up alongside things we as a business are really passionate about” says Wes Erlam, our Director of Urban Regeneration. We have a portfolio in regeneration and high growth joint ventures that span around 18 towns and cities across the UK.
When it comes to geographical concentration, we don’t focus on one area of the UK. We also ensure that we do not focus in on purely “high value” locations, says Wes. Instead, the aim is to work with like-minded local partners and identify places where great relationships can be cultivated. This is part of our effort to use capital for society’s benefit, across the whole of the UK.
An example of this in practice is the Newcastle Helix site, which is one of the biggest urban regeneration projects of its kind in the UK.
Six or seven years ago, we began a dialogue with Newcastle University and Newcastle City Council to purchase what was the run-down site of the former Newcastle Brown Ale brewery.
Legal & General’s teams from our Capital and Retirement businesses and the local council worked together on the scheme that has enabled the university to develop national innovation centres for data and ageing on the site. Newcastle Helix also addresses social concerns, since this site now also includes 450 new homes and provides knowledge-based jobs for future generations.
The Newcastle Helix partnership is a great example of collaboration that is “boosted by the power of partnership” says Wes. The scheme is led by the community but importantly, it is successful because it is master planned and designed collectively. The scheme is now 70% complete.
Climate emergency
Our urban regeneration projects promote local skills, bring the growth of responsible businesses and improve the environment.
We are all increasingly aware of the climate emergency and creating environmentally friendly assets. The Newcastle Helix scheme, for example, includes a district energy centre, which provides centralised heating for occupiers, which leads to huge carbon savings every year. It has the ability to connect to buildings outside of the Helix estate itself too. Details such as this help to develop a strong ethos of environmental care.
Legal & General has many growth ideas and ambitions for the UK, with a focus on lifestyle, wellbeing and technology. We have already had great success working with different private and public sector entities, and although there are no projects outside the UK to date, the model is portable and there is definitely scope for more global projects. The US, for example, could be a feasible option, since their real estate market has a similar blueprint to the UK.
Generating returns for our customers
By using pensions to fund investment projects, insurers can create a virtuous circle of older savers contributing towards economically useful assets.
We invest premiums received from Pension Risk Transfer transactions into assets that will deliver returns in the long-term, ensuring we’re able to pay policyholders all they have been promised in retirement.
Once we receive the premium, a portion of the funds is allocated into projects by our Capital and Real Assets businesses.
“Real estate-style assets, like the Oxford University venture and Cardiff Central Square regeneration project, lend themselves well for backing our pension promises and deliver the long-term cash flows needed” says Aaron McClure, Investments Manager in our Retirement business.