Legal & General takes stake in US property investment group

Legal & General has bought a “material” equity stake in a US real estate investment group and handed it $200 million of seed money to buy and improve apartment blocks for rent.
The FTSE 100 investment group said the deal with Taurus Investment Holdings would help accelerate its plan to expand aggressively into private markets and reduce its reliance on traditional listed investments.
Taurus is based in Boston and develops, finances and leases out real estate developments across the US as well as in the UK and Germany. Founded in 1997, it manages assets worth $11 billion.
The deal has been structured so that L&G could lift its stake in Taurus further and ultimately take control. The company is owned by its management led by Peter Merrigan.
Taurus has been expanding fast into apartment blocks, known as “multi-family real estate”, and industrial property, which L&G said have been the two best performing property subsectors in the US over the past 20 years.
António Simões, chief executive of L&G, said the deal would accelerate progress in US real estate and build scale in its private markets division. In June he announced an ambitious target to expand private markets to assets of £85 billion by 2028 from £52 billion as of June.
L&G, which has £1.1 trillion of assets under management, first pushed into the US in 2006 and today manages $231.9 billion of assets there with a team of 275 people. It already has a real estate 50-50 joint venture with Ancora, a North Carolina developer of real estate assets for universities and hospitals.
The group has not disclosed the size of the stake, but it is “material” according to Bill Hughes, global head of private markets, and the alliance seen as “strategic”. US real estate is predicted to be one of the sectoral winners in the event of a Donald Trump victory next month. “We’re long-term investors. The politics is relatively unimportant,” said Hughes.
L&G is initially using its own capital for the seed money but plans to introduce client money to Taurus in time. The aim is to buy existing buildings, not develop new ones, though some will be modernised and retrofitted.
The investment company has deployed over £5 billion into US private credit market, backing one of the first public-private partnerships involving a public school system in the US which is financing the building of six new schools in Maryland.