The deal supports Inspired Villages’ next stage of growth as it scales up to deliver net zero carbon later living communities across the UK.
Legal & General has entered into a 15-year joint venture partnership (JV) with NatWest Pension Trustee Limited (NWPTL), to invest £500m of equity to build later living communities which will be developed and operated by Inspired Villages.
The deal supports Inspired Villages’ next stage of growth as it scales up to deliver net zero carbon later living communities across the UK.
There are now more than 12 million over-65s in the UK, with this figure expected to increase by 41% to nearly 18 million by 2040; however, there are currently only 78,000 later living homes in this country and only around 7,000 new units delivered each year.
The UK later living sector accounts for only 0.6% of over-65s living in later living communities, in contrast to around 5% to 6% in the US, New Zealand and Australia.
As part of the JV, Legal & General has sold a 50% stake in Inspired Villages’ first 11 sites to NWPTL based on an enterprise value of over £300m, allowing it to reinvest equity back into the business and support its future pipeline.
Inspired Villages currently has six operational villages with 919 residents and four sites under construction.
The deal includes a commitment to back a portfolio of 34 sites - equating to around 5,100 homes, 8,000 residents and an estimated gross development value (GDV) of approximately £4bn.
NWPTL is the trustee of one of the largest pension funds in the UK, the NatWest Group Pension Fund, which has more than 200,000 members and £53bn of assets.
It has also committed to acquiring all the developed fully occupied villages outright, placing them into an ‘Operational Fund’.
The developed villages will continue to be managed by Inspired Villages to provide ongoing resident services.
This has the potential over time to create an investment platform that allows other pension funds to access and invest in the sector via mature assets, allowing UK pension money to be deployed at scale in order to match long-term liabilities and back great outcomes for later living and UK society.
Robert Waugh, chief executive of NWPTL, said: “The investment potential of the later living sector is substantial as the need to support our ageing population increases.
"This new partnership with Legal & General and Inspired Villages aligns perfectly with our ambitions to invest in areas that present strong social and environment credentials, whilst offering a good match for our long-dated liabilities.
"As Inspired Villages continues to mature and grow its portfolio, we are excited to be coming on board to support its expansion.”
Laura Mason, chief executive of Legal & General Capital, added: “At Legal & General, we are determined to use society’s capital for society’s benefit.
"Net zero later living communities, which help to tackle climate change whilst addressing years of underinvestment in our ageing population, do just this.
"It is fantastic to be partnering with NatWest Group Pension Fund who are aligned in this purpose.
"This transaction is unique as it sees one of the largest UK pension funds investing directly into UK private social infrastructure.
"Broadening the range of growth assets that pension money can access is an important step forward for the UK’s growth agenda and economic future, allowing our country’s savings to support the UK in building back better, address climate change and tackle the major issues society is facing.
"We hope to see further deals like this follow.”
