The Canada Pension Plan Investment Board has partnered with Britain’s Lendlease Group to launch a build-to-rent investment partnership.
The partnership, which has an initial target to invest 1.5 billion pounds ($2.6 billion) in the sector, will begin with an investment of about 450 million pounds ($772 million) in the development of a new phase of homes in London’s Elephant and Castle neighbourhood. The Canadian pension fund will invest 350 million pounds ($600 million) for 80 per cent of the initial investment, while Lendlease will invest the rest.
“This investment is a great opportunity for CPPIB to further diversify our European real estate portfolio, while at the same time addressing a need in the U.K.,” said Andrea Orlandi, managing director and head of real estate investments for Europe at CPPIB, in a news release. “Through this partnership, we are able to access a sector we believe is poised for long-term growth, and we are pleased to be able to do so with Lendlease, one of our existing top global partners.”
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Further to this initial investment, the partnership will pursue opportunities within the British property and infrastructure company’s wider residential urban regeneration activities in London and across Britain. Lendlease will develop, construct and manage the build-to-rent homes on behalf of the partnership.
“In recent decades, structural shifts in the housing market have meant that demand has outstripped supply in the private rented sector, leading to a shortfall of homes in London and across the U.K.,” said Dan Labbad, chief executive officer of international operations at Lendlease.
“Today’s announcement is a logical next step for us as a business and delivers on our strategy to grow our urban regeneration pipeline and accelerate the delivery of much-needed homes, by working with institutional capital partners to launch this new asset class for Lendlease’s investment platform. CPPIB is already a highly valued, long-term global partner of Lendlease and we look forward to extending our relationship through this partnership.”
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