The West Midlands Pension Fund has backed a UK secondary real estate strategy managed by Kames Capital.

The UK pension fund has seeded Kames Capital’s closed-end UK Active Value Property Fund II with £50m (€59.1m).

The seven-year fund – a follow-on vehicle to its UK Active Value Property Trust – is targeting a £250m raise.

Mike Hardwick, head of alternatives and fixed income at the West Midlands Pension Fund, said the UK secondary property market offered an attractive and stable income yield.

The investment comes just over one month after the UK voted to leave the European Union.

Kames Capital said the result of the referendum was leading to high levels of volatility in the UK commercial property market, providing opportunities for active investors to acquire good-quality secondary assets.

Philip Bach, who will manage the fund, said Kames Capital believes there are opportunities “newly available from the fallout of the Brexit vote” – outside of the prime London hotspots.

“There remains a lack of supply for good-quality properties outside of London after the last property cycle,” he said.

A spokesperson for the West Midlands Pension Fund said it recognised the potential to capitalise on relevant opportunities in the real estate market.

The fund said that, in the run-up to the Brexit vote, increased volatility had been predicted.

Activity in the smaller lot size, it said, has “remained consistent throughout the recent market turmoil”, and the UK’s occupational market continues to be healthy.

Bach said Kames Capital’s focus would be on properties in the £5m-15m price bracket – “too big for most private buyers but too small for most institutional investors”.

The manager will look to maximise opportunities through new leases or tenants, refurbishment and redevelopment.