Border to Coast launches £1.2bn UK real estate fund with LGPS trio

Border to Coast Pensions Partnership has launched a £1.2bn (€1.4bn) UK real estate fund alongside three of its local government pension scheme (LGPS) partner funds.

The UK’s largest LGPS pool has collaborated with Tyne and Wear Pension Fund, Cumbria Pension Fund and South Yorkshire Pensions Authority to pool 65 existing holdings to seed the UK real estate fund.

Border to Coast, which holds responsibility for the strategic direction of the fund, said it has appointed Abrdn to implement the strategy at portfolio level.

Properties at launch include offices, retail, care homes, student accommodation and industrial and warehouse facilities across 26 UK counties.

Border to Coast said its aim is for the fund to more than double in size to more than £3bn in the next five years, supporting greater LGPS investment into the UK.

It will also seek to target investment into alternative sectors including life sciences and affordable housing, while targeting a return of UK CPI plus 4% over rolling 10 year periods, net of fees and expenses, the manager said.

Joe McDonnell, CIO at Border to Coast, said: “The launch of UK real estate is testament to the progress our partnership has made to date. It is a sophisticated proposition that draws on the benefits of scale to unlock greater access to quality, long-term investment opportunities in the UK for partner funds.

“That same scale has enabled us to build a dedicated and highly skilled in-house team with years of experience in the UK real estate market to support partner funds.

“The depth of expertise we have at Border to Coast coupled with the ongoing support of partner funds enables us to launch propositions that truly make a difference for the LGPS.”

George Graham, director, South Yorkshire Pensions Authority, said: “The launch of the UK real estate fund is a prime example of the benefits of collaboration and scale that pooling can provide LGPS funds. The creation of such a large fund, dedicated to investing in the UK, provides partner funds with access to a significant investment capability that has not previously been available to many, as well as access to assets of a type which would not have been available to partner funds acting alone.” 

Councillor Doug Rathbone, chair, Cumbria Pensions Committee, said: “The Cumbria Pension Fund has successfully invested in UK property for many years. To enhance that investment, it has taken the decision to transfer the majority of its UK property into the newly launched UK Real Estate proposition from Border to Coast.

“This enables us to have greater access to high quality investment opportunities than we might have been afforded alone, as well as benefit from the experience developed in the Border to Coast team.

Cameron Murray, head of UK and European real estate at Abrdn, said: “We are proud to have been appointed to support this incredibly important mandate and look forward to partnering with Border to Coast to deliver the objectives of the partner funds.

“We are keen to enhance the base portfolio, utilising the skills of our dedicated transactions team in order to identify the best opportunities in the market, with a wider opportunity-set now available through the efficiencies of scale and an aligned approach to responsible investment.”

The launch of the UK real estate fund follows the launch of two global real estate funds, Global Core and Global Value-Add, with £870m of commitments in December 2023. 

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