Border to Coast has launched a UK real estate fund with three partner funds pooling existing property holdings worth £1.2bn. The Local Government Pension Scheme pool has appointed Abrdn to advise on and implement the proposition.  

The LGPS asset pool said the new fund will rank among the 10 largest UK real estate funds and aims to provide “cost-effective access to high-quality UK assets offering long-term, durable income and stable returns”.   

Three partner funds are seeding the fund with £1.2bn, Tyne and Wear Pension Fund, Cumbria Pension Fund, and South Yorkshire Pensions Authority by pooling 65 existing holdings. These include offices, retail, care homes, student accommodation and industrial and warehouse facilities across 26 UK counties.  

The fund targets a return of UK CPI +4% over rolling 10 year periods, net of fees and expenses. Border to Coast is responsible for the strategic direction of the fund, hiring Abrdn as investment adviser and to implement the strategy at portfolio level, while Workman has been appointed property manager.  

The asset pool’s chief investment officer, Joe McDonnell, said: “It is a sophisticated proposition that draws on the benefits of scale to unlock greater access to quality, long-term investment opportunities in the UK for partner funds. That same scale has enabled us to build a dedicated and highly skilled in-house team with years of experience in the UK real estate market to support partner funds.”  

The pool expects the fund to reach more than £3bn in the next five years, and said it will seek to target investment in new sectors including life sciences and residential, such as affordable housing. The pools partner funds have invested more than £10bn in the UK via listed and private markets to date.  

George Graham, director at South Yorkshire Pensions Authority, said: “The creation of such a large fund, dedicated to investing in the UK, provides partner funds with access to a significant investment capability that has not previously been available to many, as well as access to assets of a type which would not have been available to partner funds acting alone.” 

Chair of the Cumbria Pensions Committee, Cllr Doug Rathbone, said Cumbria Pension Fund decided to transfer the properties to enhance its UK property investment, having held it for many years.  

“This enables us to have greater access to high quality investment opportunities than we might have been afforded alone, as well as benefit from the experience developed in the Border to Coast team,” Rathbone added.  

Cameron Murray, who heads up UK and European real estate at Abrdn, said: “We are keen to enhance the base portfolio, utilising the skills of our dedicated transactions team in order to identify the best opportunities in the market, with a wider opportunity set now available through the efficiencies of scale and an aligned approach to responsible investment.” 

The launch of the UK Real Estate Fund follows that in December 2023 of two global funds, the Global Core Fund and Global Value-Add Fund, with £870m of commitments. 

Another asset pool, Access, recently said that six LGPS funds have made commitments to its UK core real estate and global real estate funds, managed by CBRE.