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West Sussex fund drops property manager after 22 years

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The West Sussex Pension Fund has terminated its 22-year relationship with Cushman & Wakefield Investors (C&WI), transferring its entire property portfolio to Aberdeen Asset Management.

The fund, which currently has around £1.9bn (€2.3bn) in assets, has a strategic allocation to property of 10%, which has been managed by C&WI since 1992, according to its annual report.

C&WI now trades under La Française Forum Real Estate Partners (LFF Real Estate Partners), following a takeover earlier this year.

West Sussex confirmed to IPE its decision to appoint Aberdeen as replacement for C&WI after putting the mandate out to tender in July last year.

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Aberdeen was selected after the exercise, which saw nine other firms competing for the portfolio.

The fund’s property investments, which according to its latest published report are valued at £184m, suffered a capital decline of 4.5% during 2012-13. West Sussex attributed the decline to weaker pricing in the secondary property market.

This left the local authority scheme below its strategic allocation, with property only accounting for 7.8% of total assets.

Its review of the property portfolio showed the manager had a negative 0.1% return in the last five years, 70 basis points below benchmark, and 4.6% over three years, 1.4 percentage points below.

The manager’s target was to provide 1% over the benchmark on a three-year period.

West Sussex had given C&WI a discretionary mandate for its property portfolio, which saw the manager purchase a range of assets including supermarkets.

The fund recieved close to £8.5m in rental income from the portfolio, its last published report showed.  

In the announcement, West Sussex also said its contract with Aberdeen would allow the fund to increase its allocation to property to up to £500m, as it looks to move closer towards its strategic allocation.

Before changing its name to LFF Real Estate Partners, C&WI was jointly acquired by La Française, a French property manager, and Forum Partners, as the pair looked to develop their real estate business in Europe.

The manager runs a pan-European portfolio and currently has around $1.2bn (€888m) in assets under management.

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