U.S. private equity giant Blackstone has sold over 3,000 shared ownership homes to the UK’s largest private pension fund in a £405M deal.

Blackstone sold the portfolio to the Universities Superannuation Scheme in one of the biggest deals in the sector this year — and the largest involving shared ownership homes since their advent in 1990.

The portfolio, which is located across the UK, consists of shared ownership homes on 250 sites owned by Blackstone vehicle Sage Homes. USS' acquisition sparked the launch of Sparrow Shared Ownership, a registered social housing provider backed by capital from USS Investment Management Ltd.

Sparrow Shared Ownership said it aims to take over the operations and management of the portfolio. Sage Homes will continue to manage the portfolio during the transition.

Sage Homes was created in 2017 via a joint venture between Blackstone and Regis Group, which committed about £3.7B to fund the development of 22,600 affordable rent and shared ownership homes. More than 17,000 have been delivered so far.

Blackstone has been ramping up its interests in the UK housing market. In November of last year, it bought a huge portfolio of yet-to-be-built houses from homebuilder Vistry for £819M, marking a major push for the private equity giant into the UK rented residential sector.

“Through Sage Homes, Blackstone has been the largest provider of newly built affordable housing in the country for the last three years,” Blackstone Europe Head of Real Estate James Seppala said in a statement. “This transaction will allow us to continue to invest capital into Sage Homes to help alleviate the structural undersupply of housing across the UK.”

Meanwhile, Eamon Ray, head of private credit and alternative income at USS, said that Sparrow Shared Ownership is set to provide further capital into the UK shared ownership sector.

“This investment allows USS to use its long term capital to support the multi-decade nature of Sparrow’s business plan whilst supporting the UK social housing sector,” he said in a release.

Barclays acted as lead financial adviser, with Deutsche Bank as financial adviser, assisting Blackstone, Regis and Sage Homes. USS was advised by Linklaters, Evercore and Five Sigma Finance.