Legal & General (L&G) has announced it has secured a portfolio of over 4,000 housing units, let to Places for People Homes on a new 50-year lease, as it continues to grow its role in supporting the UK’s housing needs. Places for People Homes will use the new finance from L&G’s investment to expand the housing stock in the UK by building 7,000 new housing units over the next seven years. The new housing stock will include affordable, private rented sector and owner-occupier accommodation.
The Places for People investment represents the largest direct investment made to date by an institutional investor into the affordable housing sector; L&G has acquired the portfolio for a total consideration of £252 million (approx. €300 million). The investment by L&G Retirement and managed by Legal & General Capital is part of L&G’s strategy to increase funds allocated to direct investments and infrastructure. These investments provide an excellent match for our long-term annuity and pension liabilities, and supports UK economic growth.
Deputy Prime Minister, Nick Clegg, said: “This is very welcome news to build thousands of new homes for people across the country. Our homes are where we grow up, raise our families and grow old, and it’s vital that Britain continues to build vibrant communities where people can live, work and participate in a stronger economy and a fairer society.”
Paul Stanworth, MD Legal & General Capital, said: “This £252 million, 50 year investment demonstrates the capacity of institutions like Legal & General to help solve the UK’s housing and infrastructure crisis. At the end of 2013 we had £2.9 billion of direct investments in UK infrastructure. Since the Insurance Action Plan was announced three months ago we have made further direct investments of over half-a-billion pounds, including in social and key worker housing and student accommodation. We are developing further potential initiatives in the private rental sector and expect to develop our private placement lending business to SMEs. Implementing the Insurance Action Plan in this way is good for our customers and for the wider economy."
David Cowans, Group Chief Executive at Places for People, said: “The scale of under supply in housing and the need to invest in infrastructure across the UK is central to our determination to develop partnerships with investors like L&G in order to create new consortia to tackle the shortfall in housing construction and free up resources to stimulate innovative investment in the infrastructure required to support it.”
The investment enables Places for People Homes to stimulate new housing delivery over a range of land holdings across the UK with the proceeds raised going towards fast tracking new housing construction and infrastructure works associated with building new communities, such as new schools and roads. The structure of the investment assists in reducing Places for People Homes short term gearing whilst allowing it to build a further 7,000 new homes over the next seven years.
As a long-term provider of investment capital, L&G has invested £5.2 billion in UK infrastructure projects to date and is one of the six UK insurers committed to investing £25 billion in the UK by 2018. The deal represents L&G’s first direct investment into affordable housing and follows its recent announcement that it has agreed a £40 million, 25 year debt facility to Thames Valley Housing Association, enabling it to build over 500 new units of affordable housing.
Source: Legal & General