Cornwall Pension Fund is considering clubbing together with other local authority pension funds as part of a wider review of its property asset allocation.
The pension fund is also reviewing its existing multi-manager mandate with CBRE Global Investors.
In minutes from a 19 June committee meeting, the fund said that, since 2011, the performance of the property asset class, to which it has a 10% allocation, had been “fairly benign”.
Cornwall said the review, with help from consultants JLT, would look at how best to invest in property for the most beneficial returns, considering cost, risk, as well as diversification and governance requirements. The fund will hear the outcome of the review by year-end.
The pension fund and JLT “will also explore the possibility of collaboration with other Local Authority Pension Funds”, it said, “if appropriate and where possible”.
Cornwall’s real estate investments are managed by CBRE Global Investors’ multi-manager. For the last three years, officers and JLT have been reviewing the organisation’s ”capabilities… to provide investment services in the property asset class” for the pension fund. It added that ”a number of concerns have been raised with the Committee at previous meetings”.
The document notes that CBRE Global Investors was not directly appointed to run the mandate. The pension fund appointed RREEF (now Deutsche Asset & Wealth Management) in 2006, but the account was transferred to ING Real Estate Investment Management after RREEF’s multi-manager team – including fund manager Matt Day – departed to ING REIM in 2009.
CBRE subsequently acquired ING REIM, bringing the ING Real Estate Select multi-manager into CBRE Global Investors. Day and Mark Bunney, head of UK for ING Real Estate Select, left CBRE Global Investors in 2012 to join Kames Capital.
Alex Bignell, head of UK at CBRE Global Multi Manager, told IP Real Estate: ”At the point of takeover, the Cornwall portfolio was exposed to certain funds that experienced significant write-downs and impacted performance.
“At the same time as working through these funds, CBRE Global Multi Manager has implemented a repositioning of the portfolio.”
As of March this year, Cornwall held a £93.47m real estate portfolio, representing an allocation of 6.64%.