Local government pension scheme launches £1.2bn real estate fund

Border to Coast Pensions Partnership, the largest Local Government Pension Scheme pool in the UK, has launched a new real estate fund to unlock access to new investment opportunities in the sector.  The fund is targeting a return of UK CPI +4% over a rolling 10-year period. Three partner funds – Tyne and Wear Pension Fund, Cumbria Pension Fund and South Yorkshire Pensions Authority – have collaborated to pool 65 existing holdings to seed the £1.2bn proposition. Properties in the new fund include offices, retail, care homes, student accommodation and industrial and warehouses across 26 UK counties. Border to Coast aims to more than double the size of the fund to £3bn within the next five years and is targeting investment in new sectors including life sciences and residential. Joe McDonnell, chief investment officer at Border to Coast, said the new fund was “a sophisticated proposition that draws on the benefits of scale to unlock greater access to quality, long-term investment opportunities in the UK for partner funds”. George Graham, director, South Yorkshire Pensions Authority, added: “The launch of the UK Real Estate Fund is a prime example of the benefits of collaboration and scale that pooling can provide LGPS funds. The creation of such a large fund, dedicated to investing in the UK, provides partner funds with access to a significant investment capability that has not previously been available to many, as well as access to assets of a type which would not have been available to partner funds acting alone.” Doug Rathbone, chair of Cumbria Pensions Committee, said: “The Cumbria Pension Fund has successfully invested in UK property for many years. To enhance that investment, it has taken the decision to transfer the majority of its UK property into the newly launched UK Real Estate proposition from Border to Coast. This enables us to have greater access to high-quality investment opportunities than we might have been afforded alone, as well as benefit from the experience developed in the Border to Coast team.” The mandate is being managed by Abrdn at a fund level and Workman at a property level. The launch of the UK Real Estate Fund follows the launch of two global real estate funds  – core and value-add – in December. Together those funds have commitments of some £870m. Image © Buffik/Pixabay