Merseyside Pension Fund, with total assets worth £8.88bn (€9.7bn), has joined other investors, including the Strathclyde Pension Fund, in investing in a co-living fund managed by DTZ Investors.
The Liverpool-based local authority pension fund confirmed the undisclosed investment which gives asset owners such as Merseyside Pension Fund the opportunity to invest in the London large-scale purpose-built co-living sector.
COLIV, DTZ’s fund, which has £170m of capital to invest (assuming leverage), was launched in October last year with DTZI as the investment adviser and The Collective, the leading global co-living operator and developer, acting as asset and property manager, it announced.
The fund is seeking to provide investors with an attractive core-plus return of 8-10% p.a., and intends to build a portfolio of best-in-class large-scale co-living assets in London over a four-year investment period, it said.
Merseyside supports the fund’s “mission to deliver tangible social opportunities to the people it houses and the neighbourhoods where it invests. Its decision to proceed demonstrates that investment into the co-living sector has not been waylaid due to the COVID-19 pandemic”, DTZ said.
With a focus on the London market, DTZ said, the fund helps address the capital’s housing shortage by increasing the supply of an innovative residential asset class.
DTZ added: “Alongside the focus on social impact, a heavy emphasis is placed on positive environmental initiatives with the potential to drive down carbon emissions through the delivery of a sharing economy housing model in central and highly accessible locations, and the opportunity to increase the delivery and diversity of homes across London.”
Kate Fearnley, head of investor relations for COLIV at DTZ Investors, said: “The team at Merseyside shares our view, and that of The Collective, that it is incumbent on real estate investors and managers to have a positive impact on society whilst striving to achieve a strong risk-adjusted return.
“A further like-minded investor onboard will galvanise the fund’s efforts to provide a housing solution that responds to renters’ demands for convenient accommodation and society’s need for buildings and places that bring communities together.”
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