Worcester County Council Pension Fund has committed £20m to AEW UK Real Return Fund, bringing the total size of the fund to £86m.
The fund has already deployed around half of this additional capital with the acquisition of two residential care homes let to Prime Life, a care services provider operating a total of 57 care homes, mainly in Lincolnshire and the East Midlands. AEW said the properties provide long-dated inflation-linked income and demonstrate the fund’s commitment to investing in specialist, underrepresented sectors in the property market.
Worcestershire County Council administers the Local Government Pension Scheme, which provides the occupational pensions of employees, other than teachers, police officers, and fire fighters of the local authorities in the Herefordshire and Worcestershire area. The council also operates the scheme for members of other organisations which have made admission agreements with the fund and designated bodies who have passed resolutions with Worcestershire County Council.
The AEW UK Real Return strategy aims to align the real benefits of property with the liabilities of pension savers and long-term investors. This new fund from AEW UK targets a real total return of 4% and delivered a nominal total return of 9.9% for the 12-month period to end September 2017. The fund offers income growth linked to inflation (currently 76% of the portfolio Q3 2017).
The fund aims to access a wider UK investible universe of traditional and alternative sectors than typical core funds, aiming to generate greater diversification and lower volatility. It is targeting assets in the less cyclical areas of the economy and in more demographically driven sectors such as assisted living and care homes.
It is continuing to build an attractive pipeline of investment opportunities and the remainder of the capital will be invested over the coming months as the fund continues to build a diversified portfolio.
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