$1.7T UK Pension Giant Plans Double Assault On U.S. CRE Sector
Two divisions of one of the UK’s largest pension fund managers are planning a significant expansion into the U.S. real estate market — with rented residential sectors at the forefront of the strategy.
Legal & General Capital plans to build on a 2022 debut in the U.S. life sciences real estate sector with a push into U.S. single-family rental, Bisnow can reveal.
Meanwhile, Legal & General Investment Management, a sister division within listed pension fund manager Legal & General, earlier this month announced it had set up a dedicated U.S. real assets investment division for the first time, with a focus on multifamily residential and life sciences.
Both divisions previously invested almost exclusively in the UK and have identified the U.S. as the first overseas market to diversify their portfolios. Overall, Legal & General has £1.4T ($1.7T) in assets under management.
LGC invests the pension fund manager’s own balance sheet capital in alternative asset classes like real estate as well as managing money for the company’s pension fund policyholders and third-party client money. It manages £3.7B ($4.5B) of L&G balance sheet capital and almost £16B of external client capital.
“We’re actively looking in the U.S.,” LGC CEO Laura Mason told Bisnow in an interview. “The U.S. is a big place with a lot of investors, but the kind of sectors we invest in and the long-term projects we look at, there is not as much competition as you would think.
“There is still room for more investment, developing new assets in the single-family rental sector. We’re applying the same design principles in suburban BTR as we have in urban BTR to create great places for people to live. We’re looking to team up with public institutions that are in it for the long term.”
LGC announced last year that it plans to invest up to $4B in U.S. life sciences real estate in a joint venture with sector specialist Ancora. Its first two developments are underway in Atlanta and Providence, Rhode Island.
Earlier this month, LGIM, L&G’s broader investment management business, announced it had hired Alexia Gottschalch as head of real estate equity, U.S., and Tim Watson as head of investment and portfolio management, U.S. real estate equity. Both join from Aegon Asset Management.
It is the first time the division has had a dedicated real estate equity business in the U.S., although it has previously invested in U.S. real estate debt.
LGIM has £24B ($29B) of real estate assets under management. The U.S. expansion represents an opportunity to leverage LGIM Real Assets’ established and highly transferable core competencies in urban regeneration, build-to-rent and long-lease property, with a focus on key sectors such as multifamily residential and life sciences, LGIM said.