UK - Teesside pension scheme is scouting a new manager for its £107m (€122m) direct property portfolio after incumbent manager LVAM announced its merger with Threadneedle.

The non-discretionary tender, worth more than £1.3m, will involve constructing and managing the £2.37bn (€2.67bn) north-eastern local authority pension scheme's direct property portfolio, as well as recommending and organising acquisitions in line with the pension fund's investment strategy. 

The winning bidder will also provide operational management of the assets, which make up 4% of the overall scheme and return £7m annually in rental income.

An initial five-year contract will come with the potential for a 12-month extension.

The scheme's indirect portfolio, valued at £40m as of 30 June, will not be part of the contract.

Fred Green, head of investment at the Teesside scheme, said the move did not "for a second" indicate dissatisfaction with the service the scheme had received from LVAM.

"It's our understanding that this is just not something Threadneedle does," he said.

LV, the parent group, announced in August that it would outsource its £8.5bn asset management business to Threadneedle under a seven-year contract, most likely by the end of October, subject to regulatory approval.

Ian Harvey, head of the institutional business at LVAM, did not respond to requests for comment before deadline today.