LPFA commits to ING’s global real estate FoF
UK - The London Pension Fund Authority has committed £150m (€190m) of capital to a new global property fund of funds (FoF) launched this week by ING Real Estate Select.
The €4.8bn UK local authority scheme originally approached ING Real Estate to establish a separate global property mandate, but eventually decided to act as the seed investor in the new Global Osiris Property Fund.
"We wanted to put £150m into global property and we spent some time looking at who was the best manager and then subsequently looking at the appropriate structure," said Vanessa James, investment director at LPFA.
"The structure of this vehicle is ideal for us and it will be ideal for most pension funds."
Damien Smith, fund manager for Global Osiris, confirmed the pension scheme "started out interested in a more separate account arrangement". But when ING Real Estate discussed what it had on its "drawing board" it became clear Global Osiris represented "a very nice fit in terms of the client's requirements and our own business objectives", he said.
The new vehicle is one of the first open-ended, core balanced structures to come to the market. Only 11 out of the 48 FoF structures in INREV's database target three regions or more and many of these may use listed markets to gain exposure.
LPFA was clear from the start it wanted to steer clear of the listed sector and wanted a truly global exposure.
The Global Osiris fund will invest in non-listed property funds across Europe, Asia and the Americas, including the US, Canada and even South America.
"When we saw different property managers they came in all with different ways of doing this," James said.
"Some people were saying you can do the Far East through shares or quoted vehicles. But we had a clear view that we would quite like to do this by investing in specialists in direct property."
ING Real Estate Select claims one of attractions of the new fund is its ability to manage complex cross-border tax issues, particularly those relating to the US market, which is seen by non-US investors as particularly challenging.
James confirmed this was "one of the reasons" LPFA chose the vehicle.
ING hopes Global Osiris will now attract a broad range of investors, both in terms of size and geography.
"One of the guiding principles for the architecture of this fund is to make it as flexible as possible from a tax perspective, so investors from different countries can take advantage of [the various tax treaties] around the world," said Smith.