LGPS Central launches £500m UK direct real estate fund

LGPS Central, the asset pool for eight local government pension schemes (LGPS) based in the Midlands, has launched a £500m (€628m) fund to invest directly in a range of real estate assets in the UK.

The LGPS Central UK Direct Property Fund has made its debut investments in the industrial sector with the acquisition of an industrial and car showroom on Crown Road, Enfield, and Clayton Business Centre, a multi-let industrial estate in Hayes, West London.

The UK Direct Property Fund is a sub-fund of the LGPS Central Property ACS, developed in collaboration with its partner funds and managed in partnership with DTZ Investors.

The fund has a medium-term target to invest up to £500m across the UK in a balanced portfolio and has been seeded with investment from Leicestershire Pension Fund and Nottinghamshire Pension Fund.

The open-ended vehicle will allow for further or new investment from other partner funds.

Gordon Ross, CIO at LGPS Central, said: “We have developed the UK Property Fund in collaboration with our partner funds and utilising the vast experience and networks of DTZ Investors. Their differentiated approach to portfolio construction and management, focusing on specific traits of the assets rather than purely sector and geographic focus, is a key driver of our partnership.”

He added: “The UK Property Fund is designed to take advantage of the economies of scale that come with real estate investing providing a cost-effective investment solution for LGPS Central Partner funds as assets under management increase.”

Mike Hardwick, investment director for property at LGPS Central, said: “Now is a really good time to be investing [in real estate] both in terms of value, but also in accessing quality products.

“We have other properties in the pipeline which are not industrial. So it will be a balanced portfolio in time. But obviously, we want to take advantage of timing and those with the best prospects first of all.”

He added that one of the unique features of the UK Direct Property Fund was its strong integration of responsible investment principles. Opportunities to improve ESG credentials have been embedded into business plans and will be developed through regular tenant engagement to assist in meeting their own ESG targets, Hardwick added.

Sam Brice, fund manager at DTZ Investors, said: “We are delighted to have been appointed to support LGPS Central and the partner funds in realising their real estate investment strategy. The acquisition of Crown Road, Enfield and Clayton Business Centre, Hayes are an important first step in building the new fund.

“The acquisitions reflect a strategy that will target investments with a diversified tenant base, with opportunities to grow rental income and which are capable of being managed to meet our responsible investment objectives. Both Enfield and Hayes reflect our geographic bias to investing in strong urban locations with Hayes in particular benefiting from wider infrastructure led regeneration.”

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