CPP Investments and Kennedy Wilson Launch Single-family Rental Venture in the UK

The Canada Pension Plan Investment Board (CPP Investments) has entered a significant partnership with Kennedy Wilson, a global real estate investment company, to establish a joint venture focusing on single-family rental homes in the United Kingdom. As the demand for high-quality rental housing continues to grow, particularly in regions with good transport connections, job prospects, and vibrant local amenities, this venture is designed to address a pressing market need. With the current shortage of affordable, professionally managed rental homes across the UK, this initiative seeks to deliver energy-efficient, newly built housing that meets modern standards of sustainability, comfort, and convenience.

CPP Investments has made an initial commitment of £500 million to the venture, while Kennedy Wilson is contributing £56 million. Together, they’re aiming for an initial asset value of approximately £1 billion, which includes leverage to support additional projects and growth. In terms of ownership, CPP Investments holds a 90% stake in the venture, and Kennedy Wilson owns the remaining 10%. The partners also have the flexibility to commit further capital as they identify new opportunities, which makes this venture adaptable to changing market conditions. By focusing on single-family homes, the venture differentiates itself in the rental market, aligning with the needs of families and individuals looking for stable, long-term rental options.

This strategic partnership will actively collaborate with homebuilders to secure high-quality properties in growing local economies. The venture is specifically targeting areas that not only have a high demand for rental housing but also offer tenants access to strong job markets, reputable schools, and convenient transportation. By prioritizing energy-efficient construction and desirable locations, the joint venture aims to attract families and individuals who value modern, sustainable living spaces. Kennedy Wilson’s expertise in the rental housing market will play a key role in the development and management of these properties, as they bring years of experience in both the UK and international residential sectors.

Scaling Up with Quality Projects to Meet Housing Needs

The partnership’s initial portfolio includes properties from two projects sourced by Kennedy Wilson. The first is in Norwich, where homes built by Barratt Redrow are ready for leasing, providing the first batch of units under this new venture. The second project is in Stevenage, where homes by Miller Homes are expected to be available by the second quarter of 2025. These locations represent the venture’s emphasis on economically strong areas with high rental demand. With these projects, the venture has taken its first steps toward providing much-needed quality housing in the UK’s rental market.

Beyond these initial projects, Kennedy Wilson has already identified an extensive pipeline of potential developments. Valued at over £360 million and involving approximately 1,100 units, this pipeline reflects the ambition and scalability of the venture. At full capital deployment, the partners envision expanding to 4,000 units, which would enable the joint venture to make a substantial impact on the UK’s single-family rental market.

Tom Jackson, Head of Real Estate Europe at CPP Investments, highlighted the essential role that private investment can play in addressing the shortage of quality rental housing. He noted that private capital enables the creation of professionally managed rental properties that enhance the tenant experience, filling a critical gap in the market. “Private capital can play an important role in addressing the current undersupply of high-quality rental housing in the UK, particularly where it is professionally managed to provide a great customer experience,” Jackson explained. This venture aligns with CPP Investments’ real estate strategy to acquire and develop high-quality assets with potential for steady cash flow growth, benefiting the 22 million contributors and beneficiaries of the CPP fund.

What This Means

Kennedy Wilson, known for its expertise in owning and operating rental properties, will manage the joint venture. The company currently oversees a portfolio of more than 60,000 rental units across the United States, UK, and Ireland, which highlights its capacity and experience in the sector. This includes a vertically integrated residential platform that covers investment, asset management, and development, as well as operational and reporting systems. Mike Pegler, President of Kennedy Wilson Europe, emphasized that residential property investment has long been a key focus for the company. He views this partnership with CPP Investments as a major opportunity to scale up their efforts in delivering much-needed rental homes to families across the UK.

“The structural challenges facing institutionally managed rental housing in the UK provide a clear investment rationale to enter the market and leverage our deep experience in the sector. We are actively seeking opportunities to grow our portfolio, which offers substantial scalability potential in the UK, driving consistent risk-adjusted returns in this high-conviction subsector,” Pegler explained. He added that the partnership with CPP Investments, as a leading global institutional investor, will further enhance Kennedy Wilson’s efforts to develop and deliver quality rental housing to local communities.

Together, CPP Investments and Kennedy Wilson aim to create a lasting impact on the UK’s rental housing landscape. By focusing on new, energy-efficient homes in prime locations and leveraging both companies’ resources and expertise, this venture seeks to provide stable and well-managed rental options for families and individuals. With a long-term vision and commitment to quality, the joint venture is set to become a prominent player in the UK’s single-family rental housing market, addressing housing needs while generating strong returns for investors.