Strathclyde Pension Fund hunts for European property debt manager

The Strathclyde Pension Fund is planning to award a real estate debt investment mandate that could be as large as £500m (€554m).

According to the EU tender service TED, the pension fund is looking to appoint an investment manager or managers to invest in senior debt and whole loans secured against UK and continental European commercial property.

The size of the mandate would be between £200m and £500m, and could take the form of a separate account or a pooled fund.

The online tender posted by Glasgow City Council, the administering authority of Strathclyde Pension Fund, states that a “segregated solution may be considered” but managers must also have “appropriate” pooled funds for consideration.

The strategy should focus on senior debt on value-add properties, but it can also include whole loans on good quality assets, and “limited opportunistic allocations” to mezzanine/junior debt.

The expected annual returns for the mandate should be 4-5% above LIBOR, net of fees and costs.

Strathclyde Pension Fund said it will consider the mandate “as equivalent to sub-investment grade credit risk”.

All managers and proposed mandates must be able to comply with UK Local Government Pension Scheme (LGPS) regulations.

The mandate is intended to last for five years, during which Strathclyde Pension Fund could alter its value and coverage, and has the potential for renewal.

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