The Newport investment is part of a long-term effort from Legal and General to invest in run-down areas for economic and shareholder benefit

Legal and General's £95m investment will bring affordable housing to Newport residents amid worries over rising house prices in the region

UK Insurance firm Legal and General (L&G) has made a £95m investment ($115.5m) in Welsh social-housing firm Newport City Homes to support a house-building programme in the region.

This comes soon after the insurance giant committed to building 318 build-to-rent apartments as part of the final phase of the £400m ($486m) Cardiff Central Square regeneration project.

The new £95m investment will go towards building 1,000 affordable homes in Newport over the next four years and help provide long-term capacity for a £4.6bn ($5.59bn) bulk annuity contract signed in June this year.

Steve Bolton, investment manager of L&G’s investment management arm, LGIM Real Assets, said: “Having recently signed the UK’s largest bulk annuity transaction — a £4.6bn Pension Risk Transfer with the Rolls-Royce UK Pension Fund, this investment is ideally suited for annuity money.

Steve Bolton, investment manager of LGIM (Credit: L&G)

“Legal & General is ideally placed to invest pension money into the UK economy, and our investment in Newport City Homes both matches our extended liabilities and delivers both real economic growth and social value for the UK.”

The annuity contract with Rolls-Royce has reduced the post-retirement payment obligations of the company by £4.1bn ($4.98bn).

Along with providing capacity for Legal and General to cover these obligations, the £95m investment will bring affordable housing to Newport residents amid worries over rising house prices in the region, which saw the UK’s biggest increase during 2018

L&G sees the investment as part of its long-term involvement in regeneration projects in Wales that have been underway since 2013.

“Newport City Homes are an important regional provider that plays a major role in fulfilling affordable housing needs in South Wales,” Bolton adds.

“This is another significant investment for the team and further demonstrates both our commitment to housing in the UK and our on-going support to organisations that make a positive impact on the communities they serve.”


Newport City Homes reaction

L&G were not the only company looking to support the Newport City Homes house-building scheme with investment, but its history of delivering on regeneration projects across Wales won it the contract.

Tim Jackson, executive director of finance and resources at Newport City Homes, said: “We are delighted to be partnering with Legal & General to help Newport City Homes deliver its purpose of providing homes in communities in which people want to live.

“We have ambitious plans at Newport City Homes, and this new investment will help us achieve our goal of delivering 1,000 new homes in Newport over the next four years.

“Having run a competitive process, which was strongly supported by the institutional market, we were attracted to Legal & General’s proven track record in both housing and Wales more broadly.”


L&G regeneration projects

Legal & General Capital, parent company of LGIM Real Assets, was set up in 2013 to invest L&G capital in areas that lack investment with a view that long-term investment benefits both shareholders and the wider economy.

Since then, it has invested more than £19bn into UK direct investments, such as homes, urban regeneration, clean energy and transport infrastructure.

Among the areas L&G has invested in are Manchester’s Salford, Berkshire’s Bracknell, Leeds, Newcastle and Cardiff.

A total of £2.5bn is being invested in long-term projects in these locations alone, as part of a larger plan to regenerate ten UK cities by 2021.

In Wales, the Cardiff Central Square project is still under development, with build-to-rent structures No.1 and No.2 Central Square both completed and occupied, and a promised bus station expected to be unveiled next year.