UK - West Sussex local authority pension fund has reappointed Cushman & Healey in a £340,000 deal to manage its direct property portfolio.

The tender, part of a rolling procurement timetable, comes as the £960m (€1,217m) scheme mulls diversification into continental European property markets.

Scheme spokeswoman Rachel Fisher said the agency's bid had scored highest across all three criteria: technical (70%), financial (20%) and legal (10%).

The pension fund's £127m real estate allocation makes up just over 8% of its overall portfolio, against a target of 10%. Of the 8%, £93m (6%) is direct, £33.6m (2%) indirect. The last published figures- in the 2006/7 annual report - show directly invested property returning 15.6%.  

Its target comprises "good properties with above-average growth prospects at advantageous prices, investing where possible towards the bottom end of the cycle". Despite a bias towards low-risk investment and an aversion to speculative developments, the scheme earmarks 10% of the fund directed towards higher-risk investment.

"The policy is to spread risk within the portfolio by having it balanced geographically and between uses," says the report.

As well as its direct portfolio, the scheme has invested in retail, central London office and warehousing funds. It has no plans to increase its indirect allocation in the short term.

"The investment panel sees indirect as a potentially good way to diversify and some markets dictate indirect investment as the best route but direct investment gives the fund better control over its assets," said Fisher, adding the portfolio would remain largely directly invested "for the time being".

She said there had "been discussion" over diversification into mature European markets.

"It's under review - but there won't be any immediate changes," she said.

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