Canada Pension Plan Investment Board has partnered with real estate investment company Kennedy Wilson to launch a £1bn single-family rental housing joint venture in the UK.
CPP Investments has committed £500m, with Kennedy Wilson committing £56m. The jv will have an initial target of approximately £1bn of asset value, including leverage, with the potential to commit further capital depending on market opportunities.
The Canadian investor will hold 90% of the venture and Kennedy Wilson 10%.
The jv will expand through partnerships with housebuilders, targeting energy-efficient, new-build housing stock in strong and growing local economies that offer residents excellent connectivity, attractive local amenities and proximity to strong employment prospects and educational institutions.
The investment programme is seeded with properties from two developments sourced by Kennedy Wilson – homes under construction by Barratt Redrow in Norwich, where Kennedy Wilson is now leasing up the first phase of completed homes, and homes being built by Miller Homes in Stevenage, which will be completed from Q2 2025.
CPP Investments and Kennedy Wilson have joined institutions such as Hines, which is targeting a portfolio of up to £500m in the UK single-family housing space, as revealed by EG earlier this month. Pension Insurance Corporation and Patrizia are also looking to deploy capital in the sector.
Kennedy Wilson has a pipeline of opportunities totalling more than £360m and 1,100 homes, with the capacity to reach 4,000 homes at full capital deployment.
Tom Jackson, head of real estate Europe at CPP Investments, said: “Private capital can play an important role in addressing the current undersupply of high-quality rental housing in the UK, particularly where it is professionally managed to provide a great customer experience.
“Investing in the UK single-family housing sector aligns well with our broader real estate strategy, to undertake scalable investments in high-quality assets with growing cash flows. We look forward to launching the jv alongside Kennedy Wilson to deliver strong returns for 22m contributors and beneficiaries of the CPP fund.”
Mike Pegler, president of Kennedy Wilson Europe, added: “Residential has long been a crucial part of Kennedy Wilson’s investment strategy, and our jv with CPP Investments, a leading global institutional investor, will propel our efforts to deliver much-needed rental homes for local families.
“The structural challenges facing institutionally managed rental housing in the UK provides a clear investment rationale to enter the market and leverage our deep experience in the sector. We are actively seeking opportunities to grow our portfolio, which offers substantial scalability potential in the UK, driving consistent risk-adjusted returns in this high-conviction subsector.”
Photo © Miller Homes
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