Local authority pension funds back rental homes investment scheme
Local authority workers' pension funds from the West Midlands and Staffordshire are invested in a £100 million scheme to back a new generation of homes for rent.
In the face of rising rents and the nationwide housing crisis, Hearthstone Investment Management has put together a £100 million fund to buy clusters of houses and low-rise blocks in areas where there is sold rental demand.
The Hearthstone Residential Fund 1 has five local authority pension funds as cornerstone investors, including the West Midlands Pension Fund and Staffordshire Pension Fund. The other three backers are the local authority funds in Nottinghamshire, Derbyshire and Teeside.
The West Midlands fund looks after the pensions of local authority workers from Wolverhampton, Sandwell, Dudley, Walsall, Birmingham, Solihull and Coventry, and some other public sector employees. It has 300,000 members and £14.3bn in assets.
The Staffordshire scheme is worth around £4.6bn and has 106,000 members from 10 local authorities and related employers such as schools, colleges and housing associations.
The fund will invest in UK regions, buying newly-built clusters of houses and low-rise blocks in areas of solid rental demand that appeal to families and young professionals.
Cristoforo Rocco di Torrepadula, a partner at Hearthstone, said: “We see an opportunity to focus on regional centers of economic growth which are undersupplied with good quality rental accommodation.
"This is also an opportunity to bring institutional quality management to what has been to date a generally poor quality consumer product. We are particularly delighted to be working with group of local authority pension fund investors.”
Philip Atkins, chairman of the Staffordshire pensions panel and leader of Staffordshire County Council said: “This is an opportunity for funds to make an investment that firstly meets our investment requirements, but also contributes in a small way to the housing need of the country.
"The growing demand and undersupply of quality housing, in particular in the private rented sector, makes residential property more resilient to economic downturns and attractive to long term investors.
"The Hearthstone Residential Fund 1 will provide a reliable income stream over the next decade while the underlying assets will act as a hedge against inflation.”
Over the next 10 years the fund's members expect to double their money to £200m.
