Coal Pension Trustees to invest in UK PRS, unfazed by 'Brexit' risk

Coal Pension Trustees is looking to invest in the UK’s private-rented sector (PRS), according to its head of investment strategy.

William Dinning told delegates at this year’s IPD/IPF Property Investment Conference in Brighton that the fund is considering a move into the increasingly popular housing market.

“We are starting to get into residential,” he said. “I can see us developing in residential the way we have with commercial – it could be 10% of our overall allocation.”

PRS is interesting for the UK’s closed coal industry pension fund, Dinning said, as “another way to access a cash-producing asset”.

“Anything that gives us an inflation hedge is attractive for us,” he said.

The potential for political instability should the UK exit the EU was raised as a possible reason for investors to shun the country’s commercial and residential sectors.

Dinning, however, said ‘Brexit’ was not an issue for long-term investors, echoing the sentiments at last month’s closed-door RE-Invest summit at MIPIM UK event, as reported here.

Goh Kok Huat, president and chief operating officer of GIC Real Estate, agreed.

”Being long-term means you can handle risks, unless you believe that those risks have a long-term impact,” he said. “It’s still early days, it has not stopped us and we have not shied away.”

Grosvenor Fund Management managing director Nick Preston said events such as Brexit can threaten sentiment, but “mostly turn out to be a damp squib”.

“It will balance out in the long run, business will go on as normal,” he said.

Coal Trustees, Dinning said, likes UK property for its liability matching, with its 250,000 members being paid in sterling.

“We continue to be positive on UK commercial property, we’re comfortable with the income stream,” he said.

“We are not ’little Englanders’ though; we own real estate companies globally and want to take advantage of global real estate. But we have to do it in the best way.”

Global commercial property, however, does ”not come top of our list of areas we feel we could be missing out on”, Dinning said, warning that there is a risk of making “late cycle mistakes” at a time of low yields.

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