Border to Coast Pensions Partnership, which manages £40.3bn (€46.8bn) of assets on behalf of 11 UK local government pension schemes (LGPS), has launched two global real estate funds .
The two vehicles will target core and value-add real estate, respectively, and have been launched with an initial £870m commitment from LGPS members. Border to Coast said the funds could grow to more than £1bn with future commitments.
Pension funds for Durham, Lincolnshire, South Yorkshire, Surrey, and Tyne and Wear committed to the £500m Global Core fund, while Bedfordshire, East Riding, and Tyne and Wear are investing in the £370m Global Value-Add fund. LGPS members not participarting are Cumbria, North Yorkshire, Teesside, and Warwickshire.
For the core fund, the first two years are expected to involve transferring legacy allocations from participating LGPS members before the open-ended vehicle is made available for annual subscriptions.
The value-add fund has £370m of commitments, will target higher returns from capital appreciation and has an initital three-year investment period.
Border to Coast said it launched the two funds in response to the desire among its LGPS members to invest in global real estate with the benefits of scale from pooling their assets.
The organisation said the benefits included greater control over investments, an enhanced approach to responsible investment, and a reduction in costs.
Joe McDonnell, CIO at Border to Coast, said: “With the launch of these funds, Border to Coast can offer our partner funds investment opportunities across the suite of typical pension scheme asset classes.
“These two global real estate funds provide partner funds with the flexibility to set a bespoke risk-adjusted return profile for global real estate and invest accordingly.”
Alistair Smith, head of real estate at Border to Coast, said: “These two new funds are the result of detailed collaboration with our partner funds and extensive preparation by our expert in-house team. It’s tremendously exciting to be able to offer new investment opportunities and a new asset class for our customers.”
Last year, Border to Coast hired The Townsend Group as a consultant to support the development of the its global real estate investment plan, and earlier this year it appointed Abrdn to help launch and manage its UK real estate investment strategy.
Earlier this week, fellow pension fund pool LGPS Central said it had launched a £500m direct UK property fund.
