PGIM Real Estate, the property investment arm of Prudential Financial, has been selected by the Co-operative's pension fund Pace to develop and manage a portfolio of UK social housing assets worth £50 mln (€56 mln).
An initial investment in 50 units at the Fair Acres development in Dunbar, Scotland is being made, which upon completion, will be let to East Lothian Council. In addition, PGIM said it had secured 48 units in Glasgow and 71 units in Yorkshire, and was actively pursuing developments across the UK. The £50 mln investment will eventually provide 350 units.
The deal follows a previous mandate awarded to PGIM to manage a commercial and residential UK property portfolio worth £265 mln on behalf of the same Co-op pension fund.
As with the first deal, PGIM will develop the portfolio as part of its inflation-linked property holdings.
'The decision by the Pace trustees to invest in the social housing sector illustrates the strength of the pension scheme and a positive will to invest in an area clearly in need of support,' said Allan Leighton, Co-op chair. 'If this approach could be adopted more broadly across the pension fund industry, then the current supply gap could be narrowed much more swiftly and effectively.'