London and Lancashire create £1bn pension property pool

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London Pension Fund Authority and Lancashire County Pension Fund will use Knight Frank Investment Management to source, execute and manage opportunities in UK commercial and residential property.

The pool combines assets from the Lancashire fund already being managed by KFIM and new money from London.

The two schemes have combined their investment power as part of the Local Government Pension Scheme, a UK-government initiative launched in 2015 that aims to ensure value for money and improved governance on pensions investing. Combined, LPP’s assets are more than £11 billion.

The deadline for the UK’s town hall schemes to submit details of how they intend to meet the criteria is July 15. An initial deadline in February saw 99 UK public pensions join into groups.

Along with the KFIM mandate, the LPP property pool will also include a £260 million allocation to specialist income and value-add strategies. These include Lancashire’s Gatefold housing development in west London and its student housing and retirement home investments, as well as LPFA’s investment in the east London housing development project, Pontoon Dock.

Chris Rule, co-chief investment officer of the Local Pensions Partnership, said: “We’re pleased to not only be talking about collaboration and pooling across the Local Government Pension Scheme, but actively engaging in it.”

The partnership is to be joined by the £1.7 billion Berkshire Pension Fund once its committee formally agrees the move, according to filings by the county council. This will take the pool’s assets to roughly £13 billion, which is short of the £25 billion set out by government in its key criteria for success.

In April, BlackRock was revealed as one of the first winners in the pensions pooling project. The US manager won a mandate to run £2.8 billion in passive assets for the eight Welsh local authority pension funds.

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