Secondary trade gives USS chunk of Standard Life fund

Pension fund buys £60m retail trust stake in large secondary market deal

USS has made one of the largest secondary trades in a UK unlisted fund. The UK pension fund has invested around £60m in Standard Life’s Shopping Centre Trust, acquiring the units at what is thought to be a small discount to net asset value.

The transaction is the second large one in the UK this year, after AREA Property Partners bought into the X-Leisure Fund in April by acquiring Hermes’ 30% stake. Standard Life has been  promoting liquidity in the  fund, which is ungeared.

As of 31 March, the fund owned shopping centres worth £1.3bn, including a £440m stake in north London’s Brent Cross centre and all of Churchill Square in Brighton, which is worth £365m. Other new investors have bought into the fund in the past three months, including ING REIM and a first French investor.

USS has been very active buying and bidding on property. Last month it bought Siemens’ headquarters in Frimley, Surrey, in a deal reflecting a 7% yield, from Invista REIM. The pension fund has bought at least three retail schemes, as well as Savoy Court on the Strand this year.

Graham Burnett, head of property at USS, said: “The fund has now invested more than £1bn in UK property over the past two years.” Mark Meiklejon, investment director at Standard Life Investments, said he could not comment on the identity of new investors in the shopping centre fund, but there had been “quite a few big trades this year”.

Standard Life has been selling the exposure of its in-house clients for more than a year. Julian Schiller, head of Jones Lang LaSalle’s corporate finance private funds advisory team, said there had been an increase in trades in UK retail funds across the board. He predicted that global secondary market transactions would rise this year, to around €4bn-€5bn, compared with €2.75bn last year. Most of the growth is expected to come from continental European and Asian vehicles.