The Northern Ireland Local Government Officers' Superannuation Committee has invested £100m in M&G Real Estate's UK residential property strategy.
NILGOSC - one of the UK'S largest local government pension schemes with around £6.5bn of assets - was established by the government in 1950.
The deal is understood to be one of the biggest pension fund PRS mandates to be awarded in the UK this year.
NILGOSC chief executive David Murphy said: "NILGOSC has a significant allocation to UK property already and this further commitment to residential property is another exciting ingredient in the mix. We believe that M&G Real Estate's fund is ideal for a long-term pension investor like ourselves and with their expertise we will benefit from steady and healthy returns."
M&G Real Estate business development director Lucy Williams added: "We now invest in the private rented sector on behalf of 13 UK pension funds, including 10 UK local government pension schemes, and one foreign pension scheme.
"While foreign investors are used to investing into residential property UK schemes are increasingly aware of what residential can add to a portfolio - diversification relative to UK commercial property, favourable demand/supply dynamics, low downside volatility and growing income returns."
M&G Real Estate head of residential investment Alex Greaves (pictured left) added: "PRS has come a very long way in a short space of time. In three years, M&G Real Estate has taken a concept to a fully scalable strategy, marking our return to the sector with the first institutional forward funding of The Rehearsal Rooms in North Acton in 2013. During this time we have invested in or financed the construction of 2000 homes, signed the first ever investor housebuilder framework agreement of its kind with Crest Nicholson and doubled the size of our internal team to keep pace with the rapid growth of our strategy.
"As an industry, we need to ensure that standards continue to increase by building high quality, sustainable communities that are designed specifically for renters."
M&G said investments to its private-rented sector (PRS) strategy would be subject to a drawdown period of between 9-12 months but said that, as it forward funds development - lending developers the money they need to build the properties and charging interest similar to the expected yield on the property on this loan - investors would begin to see return ahead of drawdown.
The asset manager's assets in the PRS space include a 97-apartment development in central Bath, developed in association with Crest Nicholson (see above); and a development of 152 new private rental homes in Acton, West London.
M&G Real Estate said it currently has a £1bn pipeline of assets.
Further reading: Residential real estate
- Residential property panel: The opportunity for pension schemes
- Investing in UK residential real estate: Why pension schemes should consider investing
- Residential property: The assets pension schemes are investing in
- What makes a good private rental property?
- PRS - The key points for pension scheme investors
While the majority (92%) of pension funds in the UK plan to increase their allocations to renewables, the economic impacts of the coronavirus will see larger climate-positive moves such a fossil fuel divestment significant delayed, Octopus Renewables...
In this live blog, Professional Pensions' sister title Investment Week collates all the breaking market news, analysis and opinion on equity, bond and currency movements as well as the impact of trade wars, tightening monetary policy and the Brexit negotiations....
Ross Trustees has secured investment backing from private equity investor LDC, as it prepares to capitalise on growing demand for professional trustee services.
Lee Sanders says the fast and adaptive market response to the crisis of 2020 has shown how much the financial system has improved upon the credit market liquidity issues that were at the heart of the 2008 global financial crisis (GFC).