Leading asset managers are lining up to bid on a new £500m real estate investment mandate from Greater Manchester Pension Fund.
The £11.1bn GMPF, the UK’s largest local authority pension fund, is understood to be preparing to advertise the tender this quarter, which would double its real estate exposure.
The mandate is expected to attract fierce competition from both blue-chip institutions and independent asset managers battling for the opportunity to add the local authority’s segregated mandate to their business.
Henderson and Legal & General and GVA already manage property investments for GMPF, which invests on behalf of 10 local authority pension schemes including Wigan and Stockport, and has a particular focus on investing in local development.
GMPF has direct property holdings valued at £455m as of December 2012, with around 75% invested in retail.
In addition to direct investment, the authority runs a £300m internal fund, the Greater Manchester Property Venture Fund, which focuses on asset management and development in the North East. The fund was created in 1990 and is managed by property consultant GVA.
Investments in this fund include , a 273,000 sq ft high-rise office building under development in Manchester in partnership with the BP Pension Scheme, and the former Royal Mail sorting office in Stockport . GMPFV is also investing in a joint venture with Manchester city council to develop 240 new homes.
The rest of GMPF’s property allocation is invested indirectly in real estate funds, including Henderson’s Central London Office Funds 1 and 2 and Legal & General’s Leisure Unit Trust.
Overall, GMPF’s property holdings returned 6.4% for the year ended 30 December 2011.
Minutes from a meeting of the fund’s property working group in July show GMPF’s management plans to appoint an external manager for further real estate investments by January 2014.
GMPF declined to comment.
sophia.furber@estatesgazette.com
