Another week and another significant investment by a major UK institutional player in the private rental space is announced.  

This time the UK's largest pension fund, USS, is the investor in question and like a number of similar initiatives by life insurers before it, USS has elected to structure its PRS project in a joint venture format with a specialist property manager, which will provide an initial 'seed' portfolio of properties - in this case the former housing association, Places for People. 

The case for long duration investors to step into the housing investment gap left by a combination of bank retrenchment, low public investment and demographic shifts is a well established (and fairly irrefutable) one. To date, infrastructure category investments in areas like student accommodation have prevailed, but as these projects have become increasingly well bid by yield hungry investors from other parts of the universe, a series of large schemes and life offices have turned to the private residential and social housing sector(s) for solutions. This has led to the rise of companies like Legal & General Homes, a modular housing specialist which partners with housing associations and developers to increase social and private rental housing provision in the UK. A well structured, investment grade project can be privately securitised and used to back defined benefit pension liabilities - or to free up capital headroom by an annuities provider in the rapidly growing UK bulk annuities sector.

Increasingly, real money investors are looking to hire cross-industry expertise to evaluate, manage and execute their projects and as a headhunter, it feels like the diaspora of real estate bankers into life offices and schemes in the post-crisis era has reached a second phase in its evolution, in which the key areas of expertise sought by our clients now extend beyond real estate financing skills and increasingly emanate from development and project management skills gained within the industry itself - perhaps in recognition of the fact that the supply of potential joint venture partners is not infinite...