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L&G backs first US infrastructure deal

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Legal & General has agreed its first infrastructure transaction in the US as part of a strategy to target real asset deals which provide high quality long-term returns to match pension liabilities.

The transaction supports plans to invest in infrastructure, direct investments and urban regeneration projects where in the UK GBP8 billion has been invested out of a medium-term target of GBP15 billion.
 
The transaction is the first ever educational sector public–private partnership to take place in the US. The financing will help to nearly double the size of the University of California, Merced, campus to accommodate 10,000 students and expand its research and teaching programmes.
 
Legal & General Retirement (LGR) is providing around USD100 million in a 38-year facility alongside a further USD660 million from other lenders.
  
Kerrigan Procter, managing director of LGR, says: “This first infrastructure deal in the US shows the growing number of tools in our box to ensure we secure long-term returns to match our liabilities. We continue to be drawn towards social infrastructure and it doesn’t get more attractive than this when the underlying asset is being developed for one of the world’s leading universities.”
 
Charles-Henry Lecointe, senior infrastructure investment manager, LGIM Real Assets, adds: “This first-of-its-kind US public-private deal demonstrates our ability to source high quality infrastructure transactions. We have built up a strong track record in this space and continue to target transactions backed by economic and social infrastructure as part of Legal & General’s wider approach to real asset investments.”
 
The extension of the University of California, Merced, campus will comprise 1.2 million gross sq ft of academic, classroom and laboratory facilities, as well as housing, dining and administrative offices, recreational facilities, utilities and infrastructure.
 
The development will have a total one-time impact related to its design and construction, including direct and ripple effects, estimated at approximately USD1.9 billion in the region – and USD2.4 billion state-wide. By 2022, the ongoing operations of the project will increase spending by over USD200 million per year in the state.
 
The University of California is one of the largest public universities in the world and the largest public university system in the US with 10 campuses, six medical schools, five academic medical centres and three national laboratories.
 
The project consists of 13 buildings and will be delivered in three phases between 2018 and 2020. The development is being delivered by public-private partnership developer Plenary Group and contractor Webcor. Goldman Sachs arranged the financing of the transa

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