Legal & General and NatWest Group Pension Fund form £500m JV to scale up delivery of net zero carbon later living communities through Inspired Villages

4 August 2021

Legal & General announces that it has entered into a 15-year joint venture partnership (the JV) with NatWest Pension Trustee Limited (NWPTL), the defined benefit pension scheme of NatWest Group, to invest £500m of equity to build later living communities which will be developed and operated by Inspired Villages. The deal supports Inspired Villages’ next stage of growth as it scales up its ambitions to deliver net zero carbon later living communities across the UK to meet the fast-growing need for specialist later living accommodation.

With an ageing society, we will soon have more people over 65 than under 18 but do not have the infrastructure, health-spend or social care to support this long-term demographic shift, exacerbated by a shortage of suitable later living options. There are now more than 12m over 65s in the UK with this figure expected to increase by 41% to nearly 18m by 2040; however, there are currently only 78,000 later living homes in this country and only around 7,000 new units delivered each year. The UK later living sector lags significantly behind international comparisons, accounting for only 0.6% of over-65s living in later living communities in contrast to around 5% to 6% in the US, New Zealand and Australia.

Operating over long investment horizons and as responsible investors, Legal & General and NWPTL are aligned in their desire to back investments that deliver a positive environmental and social impact. Having committed to delivering all new housing stock as operationally net-zero carbon by 2030, Inspired Villages broke ground on its first two net-zero carbon in regulated energy developments earlier this year. Located in Bedfordshire and Hampshire, together they are bringing forward over 350 energy efficient homes – a first for the UK’s later living sector. The Central Bedfordshire site (Millfield Green), will use renewable energy generation throughout, delivered through on-site photovoltaics, EV-charging, improved building fabric and insultation, Mechanical Heat Vent Recovery units and ground-source heat pumps. Providing ample heating and hot water to serve the village centre and its 200 homes, giving residents long term security over running costs whilst helping to combat climate change, the ground source heat pump system will be the largest of its kind to date to be delivered by Kensa Group, a market-leader backed by Legal & General.

Inspired Villages was established by the Inspired management team and Legal & General Capital, Legal & General Group’s alternative asset platform, in August 2017. As part of the new JV, Legal & General has sold a 50% stake in Inspired Villages’ first 11 sites to NWPTL based on an enterprise value of over £300m, allowing it to reinvest equity back into this fast-growing 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 (GDV) of c.£4bn – it enables Inspired Villages’ to scale its impact in addressing the considerable shortage of appropriate housing for older people in the UK.

NWPTL is the trustee of one of the largest pension funds in the UK, the NatWest Group Pension Fund, which has more than 200,000 members and £53bn of assets. It has also committed to acquiring all the developed fully occupied villages outright, placing them into an ‘Operational Fund’. The developed villages will continue to be managed by Inspired Villages to provide ongoing resident services. This has the potential over time to create an investment platform that allows other pension funds to access and invest in the sector via mature assets, allowing UK pension money to be deployed at scale in order to match long term liabilities and back great outcomes for later living and UK society.

Source: Legal & General