Legal & General to invest £2.5bn pension money into BTR

Legal & General targets further £2.5bn of pension money to invest into BTR, delivering homes for local communities.

Legal & General to invest £2.5bn pension money into Build to Rent developments | BTR News
Legal & General to invest £2.5bn pension money into Build to Rent developments.

A division of the Legal & General Group – Legal & General Retirement Institutional (LGRI) announces today (16 February 2022) that it targets to invest £2.5bn of Defined Benefit (DB) schemes’ retirement funds into Build to Rent schemes over the next five years – creating 7,000+ new homes.

In 2021, LGRI invested over £500m into the sector – on the development of four Build to Rent schemes in Stratford, Hove, Southampton and Lewisham. In total, these schemes include over 1,300 new homes for the local communities. Residents are due to move into the Hove and Southampton schemes in 2024.

“Following successful investments in 2021 and our long-term track record in the development and operation of Build to Rent 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 Build to Rent homes.”

Dan Batterton, Head of BTR, Legal & General Investment Management Real Assets

LGRI invest with the support of Legal & General Investment Management Real Assets (LGIMRA) – one of Europe’s largest institutional asset managers and a major global investor. LGIMRA is one of the largest investors into Build to Rent, investing c£2.5bn into twenty schemes around the UK to date, with 2,700 apartments operational and a further 6,000 under construction. 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.

Legal & General’s well established Build to Rent platform directly develops and works alongside third parties to create best-in-class schemes, which help to tackle the UK’s housing crisis by using pension funds to deliver thousands of new homes. 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 which are spread across the UK, the company further demonstrates the principle of ‘Inclusive Capitalism’ which supports the Government’s ‘Levelling Up’ agenda.

“Through investing pension funds into Build to Rent 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.”

Andrew Kail, Chief Executive Officer, Legal & General Retirement Institutional

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 ‘The future of Build to Rent in a net-zero world’ report. This includes reducing carbon emissions associated with construction and using renewable energy. All Legal & General’s Build to Rent units are targeting net zero carbon in operation by 2030.

Legal & General also published a report in 2020 which highlights how DB pension money can be used to plug the UK’s £1tn infrastructure gap over this decade. The report goes on to state that by investing DB pension funds, it 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.