15-year JV to bring forward around 5,100 homes and c.£4bn GDV
3 Aug 2021
Legal & General announces that it has entered into a 15-year joint venture partnership (the JV) with NatWest Pension Trustee Limited (NWPTL), the defined benefit pension scheme of NatWest Group, to invest £500m of equity to build later living communities which will be developed and operated by Inspired Villages. The deal supports Inspired Villages’ next stage of growth as it scales up its ambitions to deliver net zero carbon later living communities across the UK to meet the fast-growing need for specialist later living accommodation.
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.
Inspired Villages offers a wide range of housing options, starting from £230,000 and ranging from 1-bedroom rental apartments to 2/3-bedroom houses for sale, all set within vibrant communities carefully designed for the needs of older people and focused on promoting an active lifestyle. Offering an aspirational lifestyle choice, it aims to improve the holistic wellbeing for the over 65s and support them in living healthier, independent lives for longer so that they can remain in their own home as they age, while being able to access necessary care and wellbeing services. With a strong social purpose, it is driven by the desire to keep its residents healthier and happier for longer and take the pressure off our already overstretched NHS and care services. Research1 shows us that gains in life expectancy are predominantly made up of years in poor health, with the proportion of life in good health remaining broadly flat; by focusing on prevention rather than cure, targeting aging and health span, there are significant economic gains to be made for us all.
Described by medical professionals as a “silent epidemic”, loneliness has profound medical implications. Even before the pandemic, more than 2m people in England over the age of 75 lived alone and more than 1m older people said they go for a month without speaking to a friend, neighbour or family member2. This social isolation and loss of social support has been further exacerbated in the last 18 months. Later living communities, in contrast, have provided safer environments, offering residents the ability to self-isolate in their own homes whilst maintaining access to a network of support and social interaction which is not possible for those who live alone in traditional housing. Facilities such as gyms and swimming pools have largely remained open to residents, through safety measures including single household bookings, with exercise classes also being led online. The village teams have also organised socially distanced coffee and wine gatherings on resident balconies and patios, arranged walks and socially distanced exercise classes in the spacious green grounds of the villages, delivered cooked meals from the restaurants, and made regular buddy calls and deliveries to keep up morale.
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. Located in Bedfordshire and Hampshire, together they are bringing forward over 350 energy efficient homes – a first for the UK’s later living sector. The Central Bedfordshire site (Millfield Green), will use renewable energy generation throughout, delivered through on-site photovoltaics, EV-charging, improved building fabric and insultation, Mechanical Heat Vent Recovery units and ground-source heat pumps. Providing ample heating and hot water to serve the village centre and its 200 homes, giving residents long term security over running costs whilst helping to combat climate change, the ground source heat pump system will be the largest of its kind to date to be delivered by Kensa Group, a market-leader backed by Legal & General.
Inspired Villages was established by the Inspired management team and Legal & General Capital, Legal & General Group’s alternative asset platform, in August 2017. 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 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 £53bn of assets. It has also committed to acquiring all the developed fully occupied villages outright, 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.
Robert Waugh, CEO of NWPTL: "The investment potential of the later living sector is substantial as the need to support our ageing population increases. This new partnership with Legal & General and Inspired Villages aligns perfectly with our ambitions to invest in areas that present strong social and environment credentials, whilst offering a good match for our long-dated liabilities. As Inspired Villages continues to mature and grow its portfolio, we are excited to be coming on board to support its expansion."
Laura Mason, CEO of Legal & General Capital: "At Legal & General, we are determined to use society’s capital for society’s benefit. Net zero later living communities, which help to tackle climate change whilst addressing years of underinvestment in our ageing population, do just this. It is fantastic to be partnering with NatWest Group Pension Fund who are aligned in this purpose. This transaction is unique as it sees one of the largest UK pension funds investing directly into UK private social infrastructure. Broadening the range of growth assets that pension money can access is an important step forward for the UK’s growth agenda and economic future, allowing our country’s savings to support the UK in building back better, address climate change and tackle the major issues society is facing. We hope to see further deals like this follow."
Jamie Bunce, CEO of Inspired Villages: "NatWest Group Pension Fund’s desire to co-invest is a fantastic testament to our company’s vision and hard work. The deal will allow us to grow at pace so we can help thousands more over 65s enjoy healthy, independent living for longer and support our country’s overburdened health and social care system. NatWest Group Pension Fund is closely aligned with our sustainability goals, so partnering with them will allow us to continue to lead the sector, delivering net zero carbon later living communities which will make a real difference to the way we live and age in future."
Phil Bayliss, Chairman of Inspired Villages: "Covid has shone a light on the role that later living communities play in our society, further rocket-fuelling demand for high quality, aspirational later living accommodation. Our new JV with NatWest Group Pension Fund is a tremendous validation of the growth of Inspired Villages as an operator of later living communities. Through this like-minded strategic partnership, we are able to scale our investment in this important emerging asset class, paving the way for further pension money to follow and increasing our societal impact."
Head of Corporate Communications
Legal & General Capital
T: +44 (0) 20 3124 3394
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which a third is international. We also provide powerful asset origination capabilities. Together, these underpin our leading retirement and protection solutions: we are a leading international player in pension risk transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.
*at 31 Dec 2022
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
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
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.