Islington Council will invest £20 mln (EUR 25 mln) of its £800 mln pension fund with residential property investment manager Hearthstone Investments in a move expected to reduce liabilities and boost the supply of housing in a time of government cuts.
Islington Council will invest £20 mln (EUR 25 mln) of its £800 mln pension fund with residential property investment manager Hearthstone Investments in a move expected to reduce liabilities and boost the supply of housing in a time of government cuts.
Islington is the first London borough council pension fund to invest in residential property. The TM Hearthstone UK Residential Property Fund, which Islington has chosen following a competitive tender process, is also available to retail and institutional investors and is the UK’s first residential PAIF (Property Authorised Investment Fund).
'Our decision to invest in residential property is based on careful analysis of the options,' said Cllr Richard Greening, Islington Council's executive member for finance and performance. 'It reflects our view that investment in this sector will produce good long-term returns for local taxpayers and the members of our pension fund.'
He added: 'We look forward to other pension schemes joining the fund and to starting a mass movement which will help to increase the supply of much needed new housing in our country.'
The fund holds a diversified mix of new and recently built properties, half of which are London and South East based. Most units are let to private market tenants, with some corporate lets. It is expected to yield 4% net rental income, growth with capital values predicted to slowly rise to a stable 5% growth per annum by 2017.
Hearthstone Investments is a specialist residential property fund manager which was launched in 2010.
