Last updated 13 March 2023
Legal & General Group Plc
Founded in 1836, Legal & General Group Plc is an asset and investment manager with an annual turnover of more than £50 billion and one of the UK construction industry’s biggest clients .
Financials
In the 2022 calendar year, profit attributable to equity holders at Legal & General rose to £2,659 million (2021: £2,488 million). Operating profit rose £2,523 million (2021: £2,262 million). At Legal & General Capital, which is the group”s alternative asset origination platform, operating profits grew to £509 million(2021: £461 million).
To view the financials for Legal & General Group, visit Companies House and use Company ID 01417162.
Operations
Legal & General Capital invests residential property, specialist commercial real estate, clean energy, alternative credit and SME equity. Legal & General operates as a volume housebuilder through subsidiary CALA and is also working with Morgan Sindall subsidiary Lovell Partnerships in 2022 to deliver a target of 3,000 multi-tenure properties across the next five-years.
The group also has a seven year £4 billion partnership with the West Midlands Combined Authority to invest in regeneration, Net Zero neighbourhoods and housing. The first scheme from this partnership is The Junction, which will deliver 234 homes at Oldbury in the West Midlands (Project ID: 19280853). The group also has a range of other residential operations.
Build-to-rent
Legal and General has a suburban BTR operation that plans to deliver 1,000 homes by 2024 and an urban platform, which launched in 2015 and has 17 schemes in operation of development that will deliver 6,000 homes. The group has a £200 million portfolio of around 2,500 urban BTR homes with seven schemes in operation or development, including two major developments valued at £250 million each in Wandsworth (Project IDs: 16312834 & 15342535).
Legal & General Affordable Homes
Legal & General Affordable Homes is building a combination of shared ownership and both social and affordable rented homes across the UK. In 2022, the number of operational homes increased by 1,365 units to a total of 3,032 homes and operating profits rose to £37 million (2021: £26 million). This operation has a development and operation pipeline of more than 6,500 homes, with a gross asset value of £1.2 billion.
CALA Homes
In March 2018, Legal & General took full-ownership in CALA Group in a deal that valued the housebuilder at £605 million. The enlarged CALA Homes now includes sister company Legal & General Homes and is focused on building well-designed, high-quality homes in prime locations throughout the South of England, the Midlands and Scotland. In 2022, revenue at CALA rose 9% to £1.36 billion (2021: £1,24 billion) after a 4% rise in completions to 3,027 homes (2021: 2,904 homes) at an average price of £492,000 (2021: £462,000) This produced a profit before tax, exceptional items and valuations of £169.0 million (2021: £132.7 million).
Legal & General Modular
L&G Modular is a leading builder of modular homes and was set up in 2016. The business has a factory at Sherburn-in-Elmet in Yorkshire, Land aims to be building 3,000 modular homes a year in 2024. The group works for housing associations including Peabody and Town & Country. Together with four other leading exponents of modern methods of construction L&G formed the trade body, Make Modular.
L&G Modular has a pipeline of 850 homes but has lost money every year since its inception.
Specialist commercial real estate
The group works in joint venture with other clients in the public and private sectors, including developers such as Bruntwood, Canmoor, Panattoni and Peel L&P, and universities including Birmingham and Oxford.
Through Bruntwood SciTech, Legal & General is developing a 2.5million sq ft world-leading diagnostics infrastructure, across nine sector-specialist campuses across the midlands and the North of England. Examples include the £210 million Birmingham Health Innovation Campus at Selly Oak in conjunction with Bruntwood and the University of Birmingham (Project ID: 17075654).
Legal & General has signed a £4 billion joint venture development agreement with the University of Oxford in 2019. Schemes to come out of this agreement so far include the £40 million Begbroke Science Park (Project ID: 18175602). Other major schemes also in the pipeline from this agreement include the £1 billion development of 2,000 houses and 500 student homes across various sites in Oxford (Project ID: 19220751).
Elsewhere, Legal & General has schemes in the pipeline including the £350 million Temple Island mixed use development, which includes 550 homes, a conference centre, a hotel, offices and shops (Project ID: 19075922).
Legal & General is also working with broadcaster Sky on a £175 million redevelopment of Elstree Film Studios at Borehamwood in Hertfordshire (Project ID: 19421275).
Glenigan Data
In the 2022 calendar year, Legal & General awarded main contracts for £174.4 million (2021: £595.6 million).
In 2022, Legal & General and CALA together also submitted detailed planning applications to build 1,564 homes (2021: 3,680).
Conclusion: Big client witg big plans
Legal & General’s impact on the construction industry has grown in all areas of the development and construction industry since the group acquired the 52.5% it did not already own in housebuilder CALA Homes. In 2021, Legal & General was the construction industry’s fifth biggest client but the group has since fallen to 41st in 2022 as contracts were awarded on fewer major projects.
Although the group is involved in many major developments, the average contract share for work awarded by Legal & General across this period remains relatively small at £5.5 million (2021: (2021: £17.5 million) according to Glenigan’s construction research. Legal & General is spending more but also starting more projects with contracts awarded on 32 schemes (2021: 27 contract awards).
CALA Homes is quickly repaying the group’s investment with a focus on family-friendly housing, and plans to up starts in 2023 in contrast to many of the housebuilder’s peers, but the planning pipeline for new homes halved in 2022. The focus shifted to smaller developments with the average planning application submitted in 2022 containing 99 units (2021: 167 units).
The focus remains mainly on housing but this has reduced. In 2022, 79% of the homes proposed were housing and the balance apartments (2021: 92% housing/8% flats). The fundamental imbalance in the UK housing market of too many people, not enough new homes should underpin the overall residential operations.
Elsewhere, the modular operation continues to eat up investment and the group had to pump another £7.1 million into the business in March 2022, while the wider economic challenges may slow development but Legal & General looks set to remain one of the construction industry’s biggest investors and clients for the foreseeable future.
Winning Work With Legal & General
Glenigan’s research suggests that Legal & General tends to work with major contractors. On recent projects, Legal & General has worked with Henry Construction, McAleer & Rushe and Vistry.
Architects and planning consultants that Legal & General works with include Allies and Morrison, Barton Willmore, David Lock, DPP, Glenn Howells, Hawkins Brown, JLL, NBBJ and Stephen George.
Suppliers interested in contacting Legal & General Modular should email – procurement@landgmh.com
Key Legal & General procurement contacts include:
Head of regeneration at Legal & General Investment Management – Ben Rodgers, tel: 0113-360-4844
L&G group construction director – Kirk Sleeman, tel: 0113-360-4844
CALA Homes group procurement co-ordinator – Daren Vythelingum, tel: 0131-535-5200