LGPS pooling prompts investment in social property fund
0This is not something that is safe and boring like a core property fund with a 4% yield...
Nine Local Government Pension Scheme (LGPS) funds have invested the lion’s share of the initial close of a property fund aimed at delivering 15% returns through social investment.
The Bridges Property Alternatives Fund IV has so far raised £168m – with £150m coming from LGPS funds.
And one investment boss said that meetings around LGPS pooling helped smooth the way for the deal.
Mark Mansley, chief investment officer at the Environment Agency Pension Fund, which committed £15m, said: “We formed an informal huddle at one of the national meetings on pooling.
“This helped us share information, coordinate due diligence and move forward quickly.”
He added that the process of negotiations on pooling had created relationships which should help increase collaboration on future investments across the whole of the LGPS.
On the investment risk, he said: “This is not something that is conservative and boring like a core property fund with a 4% yield. It is more akin to private equity in terms of structure and costs and returns and we are happy with that in the right context. We are only going up to just over 1% of our total portfolio in Bridges funds.”
The Bridges fund will aim to invest in niche sectors, such as health and social housing, emerging locations and property considered good value due to dilapidation.
Simon Ringer, partner and head of property funds at Bridges, said: “We would not do any investment that didn’t have a social return, but we are targeting a return of around 15%, which we have achieved on similar funds we have launched in the past.”
He said that Bridges is targeting a final close value of around £300m, with investment expected from the US and other institutional investors.
The LGPS investors in the fund so far are: Clwyd Pension Fund, Derbyshire County Council Pension Fund, East Riding Pension Fund, Environment Agency Pension Fund, Greater Manchester Pension Fund, Merseyside Pension Fund, South Yorkshire Pension Fund, West Midlands Pension Fund and West Yorkshire Pension Fund.
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