Northern Irish pension fund invests £100m in M&G's housing fund

The Northern Ireland Local Government Officers Superannuation Committee (NILGOSC) has given M&G Real Estate £100m (€118m) to invest in the UK’s private-rented sector (PRS).

The pension fund has committed the capital to M&G’s UK Residential Property Fund, which had a net asset value of £271m at the end of September.

David Murphy, NILGOSC chief executive, said: “NILGOSC has a significant allocation to UK property already and this further commitment to residential property is another exciting ingredient in the mix.

“We believe that M&G Real Estate’s fund is ideal for a long-term pension investor like ourselves and with their expertise we will benefit from steady and healthy returns.”

M&G Real Estate’s UK Residential Property Fund has returned 9.3% year-to-date, according to a third-quarter factsheet.

The fund has invested for 13 UK pension funds, said Lucy Williams, business development director at M&G Real Estate.

“Whilst foreign investors are used to investing into residential property, UK schemes are increasingly aware of what residential can add to a portfolio – diversification relative to UK commercial property, favourable demand/supply dynamics, low downside volatility and growing income returns,” she said.

M&G Real Estate said the deal is one of the biggest pension fund PRS mandates to be awarded in the UK this year.

The fund’s Q3 factsheet says uncertainty caused by the UK’s referendum decision to leave the European Union could, counterintuitively, have a positive impact on the fund, helping to drive future rental growth as more people decide to delay buying their own home.

The Brexit vote, it said, could help the fund source more “high-quality stock as housebuilders look to de-risk their portfolios”.

M&G Real Estate appointed PRS operator the LIV Group as its build-to-rent residential manager in September. The Leeds-based operator will be responsible for 600 units within M&G Real Estate’s UK residential property strategy.

Last month, the Royal Institute of Chartered Surveyors warned that PRS was currently unable to keep up with predicted demand.

Read more on the progress of PRS in the UK in the November/December edition of IPE Real Estate.