Worcester County Council Pension Fund commits £20m to AEW U.K. Real Return Fund
Worcestershire County Council Pension Fund has committed £20 million ($27 million) to AEW’s U.K. Real Return strategy, bringing the total fund size to £86 million ($116 million).
The fund has deployed around half of this additional capital with the acquisition of two residential care homes let to Prime Life Limited, a care services provider operating a total of 57 care homes, based mainly in Lincolnshire and the East Midlands. The properties provide long dated inflation linked income and demonstrate the fund’s commitment to investing in specialist, underrepresented sectors in the property market. Care homes such as these, with their long leases and sustainable income profile, are important additions to the fund’s investment portfolio.
Worcestershire County Council administers the Local Government Pension Scheme (LGPS), which provides for the occupational pensions of employees, other than teachers, police officers, and fire fighters of the local authorities within the Herefordshire and Worcestershire area. Worcestershire County Council also operates the scheme for members of other organizations, which have made admission agreements with the fund and designated bodies who have passed resolutions with Worcestershire County Council.
The AEW U.K. Real Return strategy aims to align the real benefits of property with the liabilities of pension savers and long-term investors. The new fund from AEW U.K. offers investors an alternative to the popular long lease funds on offer today. It targets a real total return of 4 per cent and delivered a nominal total return of 9.9 percent for the 12-month period to end September 2017. Unlike most long lease funds, the fund offers income growth linked to inflation (currently 76 percent of the portfolio third quarter 2017).
The fund accesses a wider U.K. investible universe of traditional and alternative sectors than typical core funds, aiming to generate greater diversification and lower volatility. It is targeting assets in the less cyclical areas of the economy and in more demographically driven sectors such as assisted living and care homes. It is continuing to build an attractive pipeline of investment opportunities and the remainder of the capital will be invested over the coming months as the fund continues to build a diversified portfolio.
