Blackstone has sold 3,000 houses to the UK's largest private pension fund, the Universities Superannuation Scheme (USS), for £405 million. This represents the largest affordable housing deal of its kind, as the country’s new Labour government seeks to increase the housing supply.
The USS, an academic pension manager with assets of 77 billion pounds, has taken over the portfolio of shared-ownership apartments from Sage, a company specializing in affordable housing that is majority-owned by Blackstone along with real estate investor Regis.
Here is the translation of the heading into English:
"This is the first sale by Blackstone from its UK residential portfolio, which comprises around 20,000 homes. According to MSCI, it is the second-largest residential sale in the UK this year, following Blackstone's prior agreement to purchase new homes worth £580 million from Vistry.
Shared-ownership programs are designed to help people enter the housing market by allowing buyers who cannot afford the entire property to purchase a share of their new home, with the option to acquire the remaining share over time.
The entry of the USS into the housing sector is likely to be welcomed by ministers and policymakers who want to see greater private involvement in housing construction.
The new government has set a goal of building 300,000 new homes per year and is promoting private investment in key infrastructures to keep its promises. Finance Minister Rachel Reeves met with Blackstone CEO Stephen Schwarzman in New York last week to spark investor interest in the UK.
James Seppala, head of Blackstone's real estate business in Europe, stated that his company has been the largest provider of newly built affordable housing in the United Kingdom through Sage over the past three years. "This transaction will enable us to continue investing capital in Sage Homes to address the structural housing shortage across the country," he said.
The properties purchased by USS will be housed in Sparrow Shared Ownership, a new social housing vehicle launched by the pension fund this week. Sparrow is led by David Avery, the former chairman of Clarion Housing.
Sage was founded in 2017 and has committed to investing £3.7 billion in the construction of 17,000 affordable rental and shared ownership homes, with a further 5,600 in planning.
Although Shared Ownership is seen as an affordable path to home ownership, critics point to several risks. A report by the House of Commons this year concluded that it is "very difficult for many Shared Owners" to achieve full home ownership, as the process of acquiring further shares is too cumbersome and they have to bear 100 percent of the maintenance costs, even though they only own a share of the property.
Despite the widespread decline in commercial property values and transactions caused by higher interest rates, residential properties remain popular among investors. For example, the private equity group Ares led a preferred equity investment of £755 million in landlord Wembley Park Quintain last month.
Only 2 percent of the private rental sector in the UK is owned by institutional investors such as pension funds and insurers, compared to more than 35 percent in Germany and the USA, according to the brokerage firm Savills.
