_Knight Frank values IVG portfolio for NatWest Group Pension Fund in JV with Legal & General
The Seniors Housing team of global property consultancy Knight Frank valued the portfolio on behalf of NWPTL.
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.
Inspired Villages offers a wide range of housing options, starting from £230,000 and ranging from 1-bedroom rental apartments to 2/3-bedroom houses for sale, all set within vibrant communities carefully designed for the needs of older people and focused on promoting an active lifestyle. Offering an aspirational lifestyle choice, it aims to improve the holistic wellbeing for the over 65s and support them in living healthier, independent lives for longer so that they can remain in their own home as they age, while being able to access necessary care and wellbeing services. With a strong social purpose, it is driven by the desire to keep its residents healthier and happier for longer and take the pressure off our already overstretched NHS and care services.
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 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.
Peter Youngs, Head of Seniors Housing Valuation & Advisory at Knight Frank, said: “This new JV and the investment by NWPTL demonstrates the continued appetite for housing with care. The sector offers strong fundamentals – underpinned by demographic shifts, price growth and a supply-demand imbalance – whilst at the same time offering seniors exciting housing choices that provide independent lifestyles with support and community.”
Robert Waugh, CEO of NWPTL, commented: “The investment potential of the later living sector is substantial as the need to support our ageing population increases. This new partnership with Legal & General and Inspired Villages aligns perfectly with our ambitions to invest in areas that present strong social and environment credentials, whilst offering a good match for our long-dated liabilities. As Inspired Villages continues to mature and grow its portfolio, we are excited to be coming on board to support its expansion.”
Laura Mason, CEO of Legal & General Capital, said: “At Legal & General, we are determined to use society’s capital for society’s benefit. Net zero later living communities, which help to tackle climate change whilst addressing years of underinvestment in our ageing population, do just this. It is fantastic to be partnering with NatWest Group Pension Fund who are aligned in this purpose. This transaction is unique as it sees one of the largest UK pension funds investing directly into UK private social infrastructure. Broadening the range of growth assets that pension money can access is an important step forward for the UK’s growth agenda and economic future, allowing our country’s savings to support the UK in building back better, address climate change and tackle the major issues society is facing. We hope to see further deals like this follow.”
Jamie Bunce, CEO of Inspired Villages, said: “NatWest Group Pension Fund’s desire to co-invest is a fantastic testament to our company’s vision and hard work. The deal will allow us to grow at pace so we can help thousands more over 65s enjoy healthy, independent living for longer and support our country’s overburdened health and social care system. NatWest Group Pension Fund is closely aligned with our sustainability goals, so partnering with them will allow us to continue to lead the sector, delivering net zero carbon later living communities which will make a real difference to the way we live and age in future.“
Phil Bayliss, Chairman of Inspired Villages, commented: “Covid has shone a light on the role that later living communities play in our society, further rocket-fuelling demand for high quality, aspirational later living accommodation. Our new JV with NatWest Group Pension Fund is a tremendous validation of the growth of Inspired Villages as an operator of later living communities. Through this like-minded strategic partnership, we are able to scale our investment in this important emerging asset class, paving the way for further pension money to follow and increasing our societal impact.”
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