Leicestershire and Nottinghamshire County Council Pension Schemes invest in new Kames Capital property fund
Kames Capital has been awarded a combined £55 million to its new closed-ended property fund by Leicestershire County Council Pension Fund and Nottinghamshire County Council Pension Fund.
Both schemes join the West Midlands Pension Fund, which committed £50m seed investment at the launch of the seven-year closed-ended Active Value Property Fund II in July. All three funds are part of the soon-to-be-established LGPS Central investment pool.
The fund, managed by Philip Bach, is targeting a blended initial yield of 7-8% per annum on assets purchased* and targets the good quality secondary commercial property market, particularly those properties in the £5m to £15m price bracket. The new fund is a successor vehicle to the Kames UK Active Value Property Unit Trust, which raised £275 million from institutional investors and closed to new commitments by 31 December 2014.
Commenting on the investment in the fund, Colin Pratt, Investments Manager of the Leicestershire County Council Pension Fund, said: “UK secondary property offers an attractive and stable yield, and following the EU referendum vote we believe that the uncertainty will throw up opportunities within the property market. As existing investors with Kames Capital we understand the active value approach and the depth and quality of the team behind the new fund.”
Simon Cunnington, Senior Accountant (Pensions, Investments & Treasury Management) of the Nottinghamshire County Council Pension Fund, said: “The result of the EU Referendum is leading to high levels of volatility in the UK commercial property market. This offers opportunities for active investors to acquire good-quality secondary assets at attractive prices. We have a longstanding relationship with Kames Capital and are delighted to support the new fund.”
Shaun McWilliam, Kames Capital’s Head of Institutional Sales for Property, said: “Our active value strategy focuses on good-quality income, enhanced through active management and offering the prospect of positive rental growth. We are delighted that three local government pension schemes have decided to support the new fund with a combined £105 million, demonstrating confidence in our property investment team and the positive investment case for secondary property.”
The Active Value Property Fund II has a seven-year life cycle with the opportunity to extend for a further two. The fund structure is a Jersey Property Unit Trust.