Real estate fund manager PfP Capital has secured the £20m equity commitment from Strathclyde Pension Fund, one of the largest LGPS funds in the UK, for its Mid-Market Rent (MMR) strategy New Avenue Living or the ‘Fund’. The investment will help boost the Scottish Build to Rent strategy.
Having delivered 511 energy efficient homes to date in major Scottish cities with another 590 under development, the investment from Strathclyde Pension Fund will support the delivery of the next phase of Build Rent homes being delivered by PfP Capital in Scotland.
The investment to PfP Capital takes Strathclyde Pension Fund’s total investment in the Fund to £45m and has been secured during the decline of new housing delivery, a cost-of-living crisis and the imminent deadline to meet minimum environmental standards.
Other investors in the Fund include the Scottish Government, Scottish National Investment Bank, Nationwide and Places for People Scotland.
“By bringing together like-minded and highly experienced counter-parties, we see affordable, mixed-tenure housing communities with high sustainability credentials providing a blueprint for future housing delivery in the UK. For patient capital, and now more than ever amid the search for returns in today’s changed market environment, this type of real estate investment offers a rare combination of social value alongside competitive and stable long term, day-one returns. The continued support of Strathclyde Pension Fund is testament to our strong credentials as a differentiated social value fund manager with a singular strategy, track record of delivering successful schemes and communities, and the not-for-dividend Group status enables PfP Capital’s profits to be recycled onwards for more social value via Places for People. Given our structure and approach, we believe we are uniquely placed to play a major role in helping to alleviate the chronic housing shortage in Scotland alongside our partners, and very much hope more institutional investors will join to accelerate this critical housing provision.”William Kyle, MMR Fund Director, PfP Capital
Scottish Build to Rent company New Avenue Living has a mandate to deliver 1,500 high quality, sustainable and energy efficient affordable homes for rent, let at a discount to open market rents within close commuting distance of major Scottish city centres.
Since launching the Fund in 2019 with a low-cost loan from the Scottish government, PfP Capital has acquired nine sites across Edinburgh, Leith, Glasgow, Paisley, and Midlothian, with additional sites being sought to support the Fund’s 1,500 target.
“We are delighted to be increasing our commitment to PfP Capital’s pioneering New Avenue Living affordable housing strategy, via our Direct Impact Portfolio. The strategy meets our requirement to achieve satisfactory, risk adjusted financial returns alongside real social value through the development of additional, high-quality affordable homes in Scotland. We also recognise the additional benefit our investment has, with profits generated by PfP Capital being recycled to its parent, the large, not-for-dividend social enterprise Places for People Group to further its social objectives. We continue to enjoy working closely with PfP Capital’s knowledgeable and specialist team.”Ian Jamison, Investment Manager, Strathclyde Pension Fund
To meet environmental targets, the current investment portfolio aims to deliver EPC B rated or higher homes.
Additional social impact and ESG metrics have also been adopted to measure apprenticeships, training, brownfield land regeneration and community contributions.