Canada Pension Plan Investment Board (CPP Investments) has partnered with Kennedy Wilson to launch a new £1bn UK single-family rental housing joint venture.
CPP Investments will initially commit £500m, with Kennedy Wilson committing £56m, and 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.
CPP Investments will hold 90% of the venture and Kennedy Wilson will hold a 10% ownership interest moving forward.
The investment programme is seeded with properties from two developments sourced by Kennedy Wilson, including units under construction by Barratt Redrow in Norwich, and units by Miller Homes in Stevenage. Kennedy Wilson will manage the JV.
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 into the UK single-family housing sector aligns well with our broader real estate strategy, to undertake scalable investments into high quality assets with growing cash flows. We look forward to launching the JV alongside Kennedy Wilson to deliver strong returns for 22 million 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 sub-sector.”
