A ninth UK pension fund has invested in the UK Ground Lease Fund managed by Pramerica Real Estate Investors. Together with extra capital from existing investors, the fund had taken in a further £98.3m by last month since Pramerica gained the mandate from UBS last year, taking equity committed since the fund’s launch in 2007 to about £225m.
Since October 2010, Pramerica has bought four assets, worth £44.6m, including the ground leases on Vintners’ Place in the City and the new Great Northern Hotel at Kings Cross, also in London; and a lease portfolio of 184 Cotswolds holiday homes. Paul Dennis-Jones, director of UK real estate fund management at Pramerica, said pension funds are looking “further afield” from traditional assets, to match liabilities such as index-linked gilts, for investments like this fund, “which offer the potential for better returns and diversification for similar risk”.
Pramerica is believed to be planning an announcement soon about further investment and transactions Aviva Investors has also been marketing property products designed to appeal to pension funds seeking safe investments producing a slightly higher return than index-linked gilts. It has launched four funds with Aviva’s staff pension scheme as the cornerstone investor, targeting social and student housing, commercial property and ground rents.
Institutional investors in Pramerica’s PRECO IV fund have invested €120m in a joint venture with Kauri CAB Management to buy flats in Berlin. Luxembourg-based Preco Kauri CAB has spent its first €24m on 325 flats in 13 blocks.