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PIC Invests £80m into Milton Keynes Urban Regeneration

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.

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’.

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