NatWest Group Pension Fund is to back Legal & General’s Inspired Villages senior living venture in a bid to build a £4B portfolio.

NatWest will invest an initial £500M of equity into the joint venture, which will scale up delivery of around 5,100 units over the next 15 years.

As part of the new partnership, Legal & General has sold a 50% stake in Inspired Villages’ first 11 sites to the NatWest pension trustees, based on an enterprise value of more than £300M. This allows 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, with a commitment to back a portfolio of 34 sites — equating to around 5,100 homes, 8,000 residents and an estimated gross development value of £4B. It builds homes for both rent and sale.

Both partners are conspicuous for operating over long investment horizons. In this case, their patient capital is waiting for the UK population to age.

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, the supply of senior housing to rent is not keeping pace. Just 0.6% of today’s over-65s live in senior housing communities, a very light allocation compared to the 5% to 6% typical in the U.S., New Zealand and Australia.