Key Takeaways
- • Border to Coast Pensions Partnership, the largest UK Local Government Pension Scheme (LGPS) pool, launched two global real estate funds, 'Global Core' and 'Global Value-Add', on December 14, 2023, with an initial £870m in Partner Fund commitments.
- • The Global Core Fund (£500m) targets a mainly income-driven return profile, and will take legacy allocations from participating Partner Funds over roughly two years before opening to annual subscriptions from all Partner Funds.
- • The Global Value-Add Fund (£370m) targets mainly capital appreciation, with an initial three-year investment period and commitments to investee funds.
- • Further commitments are anticipated to take total capital above £1bn, according to the launch announcement.
- • ESG factors are fully integrated into both funds, including pre-investment due diligence, annual monitoring and manager engagement; a Border to Coast UK real estate proposition is targeted for 2024.
Summary
Border to Coast Pensions Partnership, the largest UK LGPS pool, has launched two new real estate funds on behalf of its Partner Funds, according to the pool's announcement on December 14, 2023. The funds, 'Global Core' and 'Global Value-Add', were launched with an initial £870m of commitments, and the pool expects additional future commitments to bring the total to over £1bn.
The two funds are designed to give Partner Funds exposure to global real estate while retaining the benefits of pooling, including greater control over investments, an enhanced approach to responsible investment and reduced costs. The Global Core Fund, with £500m in size, seeks a mainly income-driven return profile. Its initial phase will involve transferring legacy allocations from participating Partner Funds, a process expected to take approximately two years, after which the open-ended fund will accept annual subscriptions from all Partner Funds. The Global Value-Add Fund, with £370m, seeks mainly capital appreciation and gives Partner Funds a means to complement growth assets and add diversification. It has an initial three-year investment period.
Joe McDonnell, Chief Investment Officer at Border to Coast, said the launch allows the pool to offer Partner Funds investment opportunities across the typical pension scheme asset classes and gives them flexibility to set a bespoke risk-adjusted return profile for global real estate. Alistair Smith, Head of Real Estate at Border to Coast, said the funds reflect detailed collaboration with Partner Funds and preparation by the in-house team.
ESG factors are fully integrated into both funds, with detailed due diligence and assessment of several ESG factors before investment, annual monitoring of progress and engagement with managers to encourage improvements. The pool is also developing a UK real estate proposition, targeted for launch in 2024.
The two funds are designed to give Partner Funds exposure to global real estate while retaining the benefits of pooling, including greater control over investments, an enhanced approach to responsible investment and reduced costs. The Global Core Fund, with £500m in size, seeks a mainly income-driven return profile. Its initial phase will involve transferring legacy allocations from participating Partner Funds, a process expected to take approximately two years, after which the open-ended fund will accept annual subscriptions from all Partner Funds. The Global Value-Add Fund, with £370m, seeks mainly capital appreciation and gives Partner Funds a means to complement growth assets and add diversification. It has an initial three-year investment period.
Joe McDonnell, Chief Investment Officer at Border to Coast, said the launch allows the pool to offer Partner Funds investment opportunities across the typical pension scheme asset classes and gives them flexibility to set a bespoke risk-adjusted return profile for global real estate. Alistair Smith, Head of Real Estate at Border to Coast, said the funds reflect detailed collaboration with Partner Funds and preparation by the in-house team.
ESG factors are fully integrated into both funds, with detailed due diligence and assessment of several ESG factors before investment, annual monitoring of progress and engagement with managers to encourage improvements. The pool is also developing a UK real estate proposition, targeted for launch in 2024.
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