Royal London Asset Management this week completed a £190m property swap between its two life funds to improve performance.
The closed Scottish Life fund transferred £190m of central London and regional offices and retail into the Royal London long-term fund. The closed fund took on board £30m of retail warehousing from the Royal London fund.
RLAM head of property Julia Martin said: “Royal London was looking to invest and Scottish Life – largely driven by actuaries’ requirements – was looking to disinvest. Like other funds, such as ISIS Property Asset Management and Henderson Global Investors, we have been trying to improve the performance of our closed funds.
“Scottish Life didn’t have much retail warehousing in its weightings and we regard this as the best performing sector. The move also allowed Scottish Life to rebalance its equity holdings.”
Like ISIS and Henderson, Martin said, RLAM had considered taking property from its closed fund offshore. “We looked briefly at the option: it makes sense because we could sell down some units and make some business out of it. But we decided to wait until the next budget to consider the tax implications from REIT and CP 185 legislation,” she said.
The RLAM board was also set to meet at the end of the week to discuss adding gearing of 10% to its Exempt Property Unit Trust. Last year the trustees agreed to a gearing limit of up to 30%. If agreed, the gearing will boost EPUT’s purchasing power from £91m to over £100m.
