Deal for Shared Ownership Homes Marks Blackstone’s First Sale from Its Expanding UK Residential Portfolio
Another landmark deal in the sector as Blackstone sells operator and 3000 shared homes in 405m deal to UK pension fund.
Following other institutions, we’re seeing a trend of large North American equity funds entering the space – pairing the demand for social and affordable housing with long term inflationary linked returns for pension funds.
Blackstone has sold 3,000 homes to the UK’s largest private pension fund, the Universities Superannuation Scheme (USS), in a landmark deal valued at £405 million. This is the largest affordable housing transaction of its kind in the UK, aligning with the new Labour government’s efforts to increase housing supply .
USS, a £77 billion academic pension manager, purchased the shared ownership homes from Sage, an affordable housing provider that Blackstone co-owns with real estate investor Regis. This is Blackstone’s first sale from its UK residential portfolio, which includes approximately 20,000 homes. It follows their earlier acquisition of new homes worth £580 million from Vistry, making this the second-largest residential deal in the UK this year, according to MSCI .
Shared ownership schemes like these help buyers who can’t afford to purchase a property outright by allowing them to buy a share with the option to acquire more over time. USS’s entry into the housing sector is seen as a positive step towards increasing private sector investment in infrastructure, including housing.
The current government is focused on attracting private investment to help deliver on key promises, such as constructing 300,000 new homes per year. Chancellor Rachel Reeves recently met with Blackstone’s CEO, Stephen Schwarzman, in New York to promote the UK as an investment destination.
James Seppala, Blackstone’s head of real estate in Europe, emphasized that through Sage, the firm has been the UK’s largest provider of newly built affordable housing over the past three years. This transaction will enable continued investment in Sage Homes to help address the UK’s chronic housing shortage.
The properties purchased by USS will now be part of Sparrow Shared Ownership, a newly launched social housing entity owned by the pension fund. David Avery, the former chair of Clarion Housing, will lead Sparrow.
Sage, founded in 2017, has committed £3.7 billion to build 17,000 affordable rent and shared ownership homes, with an additional 5,600 in development.
While shared ownership has provided an affordable path to homeownership, critics highlight risks such as the difficulty of acquiring full ownership and the responsibility for 100% of maintenance costs despite partial ownership. However, institutional interest in residential properties remains strong, even with the broader downturn in commercial real estate.
This trend reflects the growing investor appetite for large portfolios of social housing, similar to the properties we offer at Assisted Living Investments.
At Assisted Living Investments, we offer opportunities with potential for developers to resell these properties in large aggregation deals to institutional investors like Canada Life, who typically purchase portfolios valued between £20 million and £50 million. Here is a recent example.
Additionally, our units come with a 3-year buy-back option from the developer, guaranteeing a minimum of a 30% uplift. Any further increase in value beyond 30% would be split equally between the developer and the property owner.
For more information, feel free to contact me at lee@assistedliving-investments.co.uk
