£60bn Leeds pension pool launches real estate funds

The Leeds-based Border to Coast Pensions Partnership, the largest UK local government pension scheme (LGPS) pool, has launched two new real estate funds on behalf of its partner funds.

Border to Coast said the new funds are being launched with an initial £870 million but with additional future commitments anticipated, the funds could grow to over £1 billion.

Border to Coast’s partner funds collectively have £60 billion of assets. Border to Coast invests on behalf of more than 1.1 million LGPS members.

“The two funds, ‘Global Core’ and ‘Global Value-Add’ respond to partner funds’ desire to invest in global real estate with the benefits of pooling,” said Border to Coast.

“This includes greater control over investments, an enhanced approach to responsible investment, and reduced costs.”

Border to Coast chief investment officer Joe McDonnell 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.”

Border to Coast said the Global Core Fund of £500 million provides exposure to real estate investments seeking a mainly income driven return profile.

The initial phase of the Core Fund will involve transferring legacy allocations from participating partner funds.

This is expected to take approximately two years at which point the fund, which is open-ended, will be open to annual subscriptions from all partner funds.

The Global Value-Add fund of £370 million seeks a mainly capital appreciation return, enabling partner funds to seek additional returns to complement and provide diversification to their existing portfolio of growth assets.

The fund has an initial three-year investment period with commitments to investee funds.

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.”