PIC invests a further £80 million into urban regeneration

• Takes PIC’s investment in UK productive finance to £500 million in 18 months
• Appropriate reform of Solvency II could unlock billions of Pounds more

Pension Insurance Corporation plc (‘PIC’), a specialist insurer of defined benefit pension schemes, has agreed to fund and acquire a key centrally located development in Milton Keynes for its third Build-to-Rent project. The £80 million redevelopment of a brownfield site will provide 306 new residential apartments, 43 of which will be affordable housing.

Over the past 18 months PIC has invested around £500 million in similar productive finance1 projects across the country, working closely with local councils to ensure that the projects bring significant benefit to local communities. These projects offer benefits throughout their lifecycle, for example through employment and significant spend in the local economy in the short term, and very high standards of rental accommodation for tenants in the long term.

The Milton Keynes development will employ c.750 people on site during construction, which is due to complete in late 2024. In total, PIC’s developments are employing more than 2000 people on site, as well as supporting thousands of jobs in local supply chains.

PIC expects to invest £30 billion in productive finance projects by 2030, but as its recent analysis of the current Solvency II review made clear, this figure could rise to £50 billion with appropriate, timely reform. Solvency II is the regulatory framework for the insurance industry. PIC calculates that such reform would see it invest an additional £2 billion per annum in productive finance in the short-term, including an additional £450 million in social housing in the UK. The report is available here: Investment Unleashed: How reforming Solvency II can improve the life chances and financial security of millions of people across the UK.

To date, PIC has invested more than £11 billion in socially beneficial investments in the UK which meet wider Environmental, Social and Governance (“ESG”) investment criteria, creating jobs, helping the transition to a greener economy, and balancing intergenerational equity.

Tracy Blackwell, CEO of PIC, said: “We are really pleased to announce our latest Build-to-Rent project, which will once again go above and beyond existing building requirements in terms of energy efficiency and resident safety. As our business rapidly develops, we are increasing at pace our investment into the economy and we now have a significant presence across the country, supporting thousands of jobs and regenerating key inner-city sites. Yet we would like to do more but will only be able to do so with appropriate reform of Solvency II.”

The Milton Keynes scheme will be developed by HG Living (‘HGL’), a specialist developer of Build to Rent homes and purpose-built student accommodation. HG Construction (‘HGC’) is the appointed building contractor to the project.

Key features of development:

• The development, formally a vacant office block known as ‘Bowback House’, which is fully owned by PIC, has been purpose-designed for the rental market. PIC will retain it for the long-term, using the rental cashflows to match the company’s future pension payments.
• The development will use Air Source Heat Pumps for hot water and green electric for heating, including its own solar panels, which will help the transition to a Net Zero economy.
• Examples of the enhanced building safety standards of the project include the installation of alternative escape stairwells, evacuation lifts, an emergency evacuation alert system, emergency beacons and sounders on balconies, enhanced fire suppression coverage to all back-of-house areas, and enhanced fire doors.
• Once complete, the building will provide c.25,500 square feet of external amenity space and c.10,000 square feet of internal retail / amenity space for residents, anticipated to include 24-hour concierge, residents’ lounge, gym, fitness studio, sky lounge and multi-use games room.
• The development is targeting a 4* Homes Quality Mark rating, a minimum gold WiredScore rating and all apartments to achieve a minimum EPC rating of ‘B’.

Rob Greaves, Development Director of HG Living, said: “We are delighted to be working with Pension Insurance Corporation on this project, which will be delivered in the spirit of true partnership with PIC. HG Living and HG Construction have an enviable track record of delivering projects with certainty for our institutional funding partners and creating high quality, sustainable living spaces that will make a positive long-term contribution to local communities. The Build-to-Rent sector has an important role in addressing the current housing shortage and we are pleased to play our part in bringing urgently required homes to the market at scale and at speed.”

PIC was advised by Addleshaw Goddard, CBRE, HAALO and RPS. HGL was advised by Forsters.

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Notes to Editors:

1)      Productive finance is “investment that expands productive capacity, furthers sustainable growth and can make an important contribution to the real economy. Examples of this include plant and equipment (which can help businesses achieve scale), research and development (which improves the knowledge economy), technologies (for example, green technology), infrastructure and unlisted equities related to these sectors.” https://www.fca.org.uk/news/press-releases/treasury-bank-england-fca-productive-finance    

For further information please contact:

Pension Insurance Corporation     
Jeremy Apfel                          
+44 (0)20 7105 2140

apfel@pensioncorporation.com

ApellaAdvisors                                
Andrew Brown                      
+44 (0)7721 513777                 

Janelle Romano                     
+44 (0)7792 173071           

PIC@apellaadvisors.com

About Pension Insurance Corporation plc

The purpose of PIC is to pay the pensions of its current and future policyholders. PIC provides secure and stable retirement incomes through leading customer service, comprehensive risk management and excellence in asset and liability management. At half-year 2021, PIC had insured 270,800 pension scheme members and had £47.6 billion in financial investments, accumulated through the provision of tailored pension insurance buyouts and buy-ins to the trustees and sponsors of U.K. defined benefit pension schemes. Clients include FTSE 100 companies, multinationals and the public sector. PIC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority (FRN 454345). For further information please visit www.pensioncorporation.com