Legal & General launches Student Living Platform with £122m acquisition
Legal & General Investment Management (LGIM) has announced its entry into the purpose-built student accommodation (PBSA) market with the launch of its L&G Student Living Platform.
This follows the acquisition of the Aqua Portfolio - two high-quality PBSA assets in Exeter and Glasgow - from Global Student Accommodation for a combined £122 million.
LGIM has a strong track record in the student accommodation sector, having managed more than £1.2 billion in equity and debt investments over the past 10 years.
The new platform will focus on buying operational, up-and-built PBSA units under five years old, with plans to deploy £500 million into the sector over the next two years.
The firm says the move complements its existing success in the residential property market, where they have invested more than £1.1 billion in build-to-rent, affordable housing and later living schemes.
'First direct-let acquisition in the student accommodation space'
LGIM's head of annuity transactions, Neil Dovey, said: "We're excited to have made our first direct-let acquisition in the student accommodation space.
"These assets provide high quality PBSA accommodation, situated in locations benefitting from strong academic institutions and demand from students, looking for buildings designed to meet the requirements of modern university life."
The firm's expansion into student accommodation aligns with its focus on environmental, social and governance (ESG) factors.
The move also offers diversification for its investment portfolio.
'Investing in direct-let PBSA assets'
Adam Burney, LGIM's head of annuity BTR and PBSA, said: "Investing in direct-let PBSA assets forms the next iteration of our Living Sector strategy.
"The sector has demonstrated its alignment to our strategic requirements, which includes a significant focus on ESG and provides diversification.
Andrew Kail, the chief executive of Legal & General's retirement institutional, said: "Pension scheme capital is being put to positive use in the real economy – with tangible benefits across generations.
"These buildings provide students with quality accommodation, while the British economy as a whole should benefit from long-term investing in real assets."
Two state-of-the-art PBSA assets
The two state-of-the-art PBSA assets are Clifford House in Exeter and Scotway House in Glasgow, and they have 312 and 399 bedrooms respectively. They have been purchased on behalf of Legal & General Retirement Institutional.
Both properties, completed in 2019, have delivered consistent rental growth and maintained over 98% occupancy.
The firm says it has a long-term goal of managing more than 5,000 beds across the UK and growing its PBSA portfolio to more than £1bn.
'The strength of the student accommodation sector'
The managing director of Accommodation for Students, Simon Thompson, said: "This investment from Legal & General Investment Management shows the strength of the student accommodation sector.
"Landlords need to offer quality accommodation for students that is safe and secure."
He added: "The private rented sector (PRS) is strong, despite all of the issues facing it and demand for quality student homes will be high for years to come.
"It's also interesting that the investment and platform launch is only the beginning with an ambition to build a student property portfolio worth more than £1bn."
