LCIV announces first UK housing investment and second investor

LCIV UK Housing Fund has selected CBRE UK Affordable Housing Fund as the first investment, which formally closed on 5 May 2023.

Andrew Davey, head of liability aware strategies and affordable housing at CBRE Investment Management said: “It became apparent throughout a comprehensive due diligence process that our approach to impact investment and affordable housing was closely aligned with the values and targets of London CIV so this partnership is very exciting.

“We are both committed to addressing key societal and environmental issues, and we hope to build on our track record with existing LGPS investors to work together with London CIV to make a meaningful impact and achieve their financial goals.”

Dean Bowden, CEO of London CIV said: “Affordable housing offers attractive characteristics including income that typically tracks inflation, high occupancy and low void rates, and low correlation to other real estate sectors.

“It also offers resilience across market cycles and is less sensitive to changes in the economy, as we saw during the pandemic. With our strong knowledge of the UK housing sector, deep pool of relationships and thorough due diligence process, we are well positioned to enter the market and partner with best-in-class stakeholders such as CBRE IM.”

The announcement follows LCIV recently securing Tower Hamlets as its second local authority to invest in the London CIV UK Housing Fund, after Lambeth was announced as an investor in February.

More than £250 million of client fund demand has been identified with the first close on 31 March 2023 of £150 million.

The fund will focus on increasing the supply of good quality and affordable housing in the UK across general needs, social & affordable housing, specialist housing, and transitional supported housing.

Miriam Adams, interim head of pensions and treasury at Tower Hamlets said: “The London Borough of Tower Hamlets Pension Fund, advised by Mercer considers UK affordable housing to be a compelling return opportunity with very strong impact credentials.

“The asset class is expected to provide a relatively secure income stream with an element of inflation protection, which is diversified away from more economically sensitive sectors of the real estate market.

“There is a clear shortage of affordable housing in the UK; the Fund wants to make a positive contribution to wider society by providing capital for the development of new housing in this sector.“