A strategic alliance to help UK local authorities meet ambitious housing targets has been formed by Legal & General Investment Management (LGIM), construction firm Laing O'Rourke and property management company Touchstone, according to Inside Housing.
The three parties to the alliance aim to build 2,000 private rented homes a year for local authorities. The companies have signed a memorandum of understanding and will make at least £200m ($320m) a year available to the councils.
Under the agreement, councils will lease land to LGIM, which will then fund Laing O'Rourke to carry out construction of the homes, the majority of which will be for private rent. LGIM is reportedly expecting a return of no more than 5% from the deals.
Separately, LGIM Commercial Lending has agreed a £50m, 25-year loan to care home group Sanctuary Group, according to Costar.
The loan is secured against a portfolio of care homes and the money will be used to invest in Sanctuary's existing properties as well as in new housing.
The investment has been made on behalf of L&G's annuity fund, which was also party to an earlier deal, in April, when L&G made a £50m, 40-year loan to Chorley Community Housing (CCH) to fund a pipeline of 814 new homes over the next three years in the north-west of England.
At the time, L&G said the homes would be built with annuity money, "and the return on the loan will be used to pay pensioners annuities. This investment match produces a better return for our pensioners than investing in gilts, and provides real economic growth for the UK by creating much needed new housing."
The funding was from Legal & General's lending arm, LGIM Commercial Lending Limited (CLL) and the recipient was CCH, which is a subsidiary of Adactus Housing Group. Last year CLL lent £25m over 40 years to Adactus Housing Association, and CLL has now invested a total of over £1.2bn across 14 deals.
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