Two further pension schemes commit £50m to Kames ‘Active Value’ property fund
Leicestershire County Council Pension Fund and the University of Liverpool Pension Fund have committed a combined £50 million to the Kames UK Active Value Property Unit Trust II.
Kames Capital’s active value strategy targets commercial property assets with typical lot sizes between £5 million and £15 million. These are often too large for private buyers, but too small for most institutional investors.
The Kames UK Active Value Property Unit Trust II 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 in 2014. In 2017 the Kames UK Active Value Property Unit Trust was the third best performer of 28 funds in the AREF/IPD UK All Balanced Property Funds Index, with a total return of 12.2%*.
Commenting on the investment in the fund, Colin Pratt, Investments Manager of the Leicestershire County Council Pension Fund, says: “Kames Capital’s active value strategy focuses on good-quality income, enhanced through active management and offering the prospect of positive rental growth. As existing investors, we understand the approach and the quality of the team behind the Fund. We are delighted to make a further commitment.”
Philip Bach, Kames Capital’s Head of Active Value Property, says: “We expect steady, if unspectacular, returns from commercial property over the next few years. Income will be the main driver of performance with a slight rise in rents offset by a modest rise in yields as interest rates trend upwards. We expect stock selection to be a stronger driver of performance than structural factors, so sector weightings are less relevant to performance prospects than owning the right assets in the right locations.”
* Source: AREF/IPD, over 12 months to 31 December 2017. Total investor return (GBP).