SWIP plans €150m indirect property push on Continent

Non-Sterling Fund’s property allocation may be raised via indirect buys

Scottish Widows Investment Partnership plans to make €150m of indirect investments in continental Europe in the next 12 months. SWIP head of international real estate Robert Matthews said he hoped to get approval from the Clerical Medical Non-Sterling Fund later this year.

The fund, which has about €140m of direct assets, mainly in France, plus some in Spain and Belgium, wants to increase its property allocation to 10%, but only indirectly. “Subject to agreement with the client, we will look to supplement the direct portfolio with indirect investments, split between listed and unlisted,” Matthews said.

SWIP’s real estate securities team, led by Vicky Watson, will make the listed investments. The team advises the £2.3bn SWIP Property Trust on its equities portfolio, which is worth around £160m. The Non-Sterling Fund is part of the Clerical Medical With-Profits fund, one of seven mandates to transfer to SWIP from Invista REIM last May.

Veronica Gallo-Alvarez, who worked on the non-sterling mandate at Invista, has moved to SWIP to work with Matthews. Matthews said the fund’s direct assets were of varying quality and a strategy would be drawn up for them. SWIP also manages the European Balanced Property Fund, launched in 2004 and now selling assets ahead of being wound up in three years’ time; and Pan-European Urban Retail Fund (PURetail), which targets Germany, France and Sweden.

Matthews said PURetail was more typical of future SWIP products, which would have a  geographic or sector focus and target institutional investors. PURetail has just paid nearly €20m for its first asset, a 96% leased Düsseldorf building where stepped rents from some retailers will “drive income in the next few years”, Matthews said.

PURetail, managed jointly with Cushman & Wakefield Investors, raised €100m from the Scottish Widows With- Profits Fund and two external investors at the end of March and hopes to have a second closing by Q1 2012. SWIP will announce six new recruits in the next few weeks.