UK - The £2bn (€2.1bn) Teesside Pension Fund, administered by Middlesbrough Council, has appointed LV Asset Management (LVAM) to manage the pension fund's direct UK commercial property portfolio.
LVAM, the fund management arm of the mutual insurance and investment group Liverpool Victoria - branded as LV= - will manage the pension fund's £89.7m (€95m) property portfolio for an initial term of five years and help increase the fund's domestic real estate exposure.
Howard Meaney, head of property investment at LVAM, said: "Winning this mandate provides us with a fantastic opportunity to build on the growth we have seen in our commercial property investment business over the past year and is an area of the business that we hope to develop alongside our own successful range of funds."
The pension fund currently allocated 8% to real estate but plans to increase its real estate exposure in the 12 months to its target benchmark of 10% by investing in the UK and overseas.
Fred Green, head of investments for Teesside Pension Fund, said: "We are looking to increase our overseas exposure. As far as the UK property portfolio is concerned I think it will broadly carry on the way it is, although the intention is to increase it in size."
Roughly 5% of the Teesside Pension Fund's property portfolio is made up of the UK contracts and the remaining 3% allocation is invested in indirect real estate.
LVAM was chosen from six short-listed candidates, including the current managers, Cushman & Wakefield, who have been managers of the service contract for over 20 years. The contract with LVAM is due to start on 1 April 2009.
The pension fund insisted it did not go to tender because of any dissatisfaction with Cushman & Wakefield, but because it was required to do so from time to time as a public authority, under European Union rules.
Montagu Evans, LVAM's current supplier, will handle the property management matters and Charles Maxlow-Tomlinson, principal fund manager at LVAM's property team, will manage the fund.
Ed Forbes, a spokesperson for LVAM, confirmed the company is considering making further acquisitions for the pension fund but said both parties were yet to discuss what property types and areas they would like to invest in.
"We still have to sit down and specifically go through the acquisition strategy and see what type of properties would provide a good fit and might be ones that they might want to buy and add to their pension fund at this stage," said Forbes.
At the end of June 2008, the fund's property portfolio was valued at £89.7m and had a total of 32 holdings. The highest number of holdings was in the retail sector, with 12, followed by the industrial and office sectors with nine and six respectively.
Teesside Pension Fund's property portfolio returned -1.4% in the second quarter of 2008 and -0.9 for the year ending 30 June 2008.
LVAM is a wholly-owned subsidiary of Liverpool Victoria Friendly Society Limited or LV=, which manages approximately £7bn for over 3.6m customers and members.
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