Government-backed pension fund in tie-up with L&G to build thousands of BTR homes

L&G and PGGM have been investing together in UK BTR schemes through a joint venture called the Access Development Partnership (ADP), which was launched in 2016.

The latest announcement is for the second phase of the ADP partnership, in which Nest will also now co-invest.

With locations already lined up, all new rental schemes will be targeting net zero in operation by 2030 and will be built on brownfield sites in city centres.

Emma Reynolds, minister for pensions, said the announcement “highlights the opportunities for our pensions sector to contribute to our communities and grow the economy”.

“I am delighted that Nest is harnessing the financial power of pensions to deliver more of the homes this government has pledged to build, which also serves as an excellent investment opportunity for future pensioners in their scheme,” she said.

“The government’s landmark pensions review seeks to unlock billions of pounds of investment in the UK economy and drive pension capital into long-term growth assets to make every part of Britain better off.”

António Simões, group chief executive of L&G, said the deal “marks an important milestone for L&G’s ambitions in private markets and crowding in third-party capital”.

He added: “With an inherent supply and demand imbalance, there is a big gap to fill – and thus a need to drive up the delivery of all homes, across all tenures.”

Elizabeth Fernando, chief investment officer at Nest, said: “This is a great deal for our 13 million members and the UK. By also drawing in international investment from PGGM, we’re amplifying our impact and providing much-needed residential properties across the UK.”

Dirk Bootsma, senior investment manager of private real estate at PGGM, said: “This investment not only generates stable financial returns for our client PFZW, the Dutch pension scheme for healthcare workers, it also contributes to relieve a stressed housing market which poses a huge challenge to key workers.”