The Leicestershire and Nottinghamshire County Council Pension Schemes have invested a combined £55m in Kames Capital’s closed-ended property fund.
The two schemes are members of the Local Government Pension Scheme (LGPS) Central pool currently being formed and join fellow member, the West Midlands Pension Fund, which committed £50m seed investment to the seven-year closed-ended Active Value Property fund II in July.
Both schemes said the decision to invest was driven by the uncertainty and subsequent opportunity in the UK secondary commercial property market following the UK’s decision to leave the European Union in June.
Leicestershire County Council Pension Fund investments manager Colin Pratt 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.”
Nottinghamshire County Council Pension Fund senior accountant (pensions, investments & treasury management) Simon Cunnington 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.”
Kames’ fund targets 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 fund is a successor vehicle to the Kames UK Active Value Property Unit Trust, which raised £275m from institutional investors and closed to new commitments by 31 December 2014.
Kames Capital head of institutional sales for property Shaun McWilliam 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 £105m, demonstrating confidence in our property investment team and the positive investment case for secondary property.”
