UK Pension Fund To Buy £450M Blackstone Resi Portfolio

The UK’s largest local government pension scheme is in talks to buy a 1,000-unit single-family housing portfolio from U.S. giant Blackstone.

Border to Coast is close to completing a deal to buy the portfolio of assets that are part of Blackstone’s Leaf Living platform for £450M, Green Street News reported. 

The portfolio is a mix of completed units and those under development, and Border to Coast will pay for units as they are completed, Green Street said. They are mainly in the south-east and Midlands. 

Funds in the UK’s growing LGPS sector have been major investors in UK single-family housing over the past year. 

Northern LGPS and Local Pensions Partnership Investments teamed up in November to buy the listed PRS REIT for £1.1B and pledged to invest another £1B building out the company’s portfolio. 

Border to Coast forward-funded a 142-home SFH portfolio in Cambridge in a £70M deal earlier this year. 

UK pension funds are attracted to SFH because the UK housing shortage creates strong demand for suburban rental homes, and thus the income from the sector is seen as resilient. The pension funds also have a mandate to undertake a social good for their members, and providing new housing fits the bill. 

Border to Coast was created through the amalgamation of three pension funds from Tyne and Wear, Cumbria and South Yorkshire. It has £120B of assets, and its real estate portfolio is managed by Aberdeen. 

Its creation was part of a consolidation of the UK’s LGPS sector, in an effort by the government to create funds with the investment capability of Canadian and Australian superannuation funds. 

Blackstone appointed CBRE and Goldman Sachs to review options for the Leaf Living business, which has a total portfolio valued at about £1.5B. Border to Coast approached Blackstone about the deal, and a wider sale of the business has not yet been launched, Green Street reported.