BORDER TO COAST DELIVERS ADDITIONAL BENEFITS OF PENSIONS POOLING WITH LAUNCH OF TWO INNOVATIVE REAL ESTATE FUNDS
Posted on December 14th, 2023
- Two global real estate funds, ‘Global Core’ and ‘Global Value-add’, provide access for Partner Funds to real estate investment with the benefits of pooling
- Initial Partner Fund commitment of £870m with further commitments anticipated to bring total to over £1bn
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. The Funds are launched with an initial £870m. With additional future commitments anticipated, the funds could grow to over £1bn.
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. This includes greater control over investments, an enhanced approach to responsible investment, and reduced costs.
Joe McDonnell, Chief Investment Officer 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.”
The Global Core Fund (£500m) provides exposure to real estate investments seeking a mainly income driven return profile, a further tool for Partner Funds to generate investment income. 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 (£370m) 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.”
As a long-term investor, environmental, social and governance factors (ESG) are fully integrated into the investment process for both funds. This includes carrying out detailed due diligence and assessing several ESG factors prior to making investments, monitoring progress annually and using engagement with managers to encourage improvements.
A Border to Coast UK real estate proposition is currently under development with a target launch date of 2024.
“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.”
