(September 10, 2013) — The Associated British Foods (ABF) pension fund, which provides benefits for thousands of workers on the UK high street, has been bolstering its real estate portfolio with acquisitions and staff, aiCIO can reveal.
Over the past 18 months, the £7.5 billion pension has bought a hotel in Edinburgh, another in London’s Docklands and a large retail and leisure park in the north of England.
Colin Hately, group pensions director at ABF, told aiCIO the fund had appointed Kevin Seville last year to bring a larger part of its real estate investment capacity in-house. Seville had previously worked with the fund through his previous employer, Wilky Fund Management—a real estate specialist.
“We want to increase our allocation to real estate,” said Hately. “We have committed to between £280 million and £300 million. We are half way there already, but these deals take a long time to put together and carry out.”
The fund has begun assembling its own deals, rather than use a third party manager, by finding tenants and land and setting about constructing the buildings they need.
“We are looking to be providers of long-term capital,” said Hately. “We are creating bond-like structures, but using real estate so we can match the duration and other qualities to what we need.”
The fund’s latest project is a £60 million retail and leisure park in York, Marks Cross, that will host several large names including Marks & Spencer, John Lewis, and boast a rugby and general sports ground. ABF is undertaking all infrastructure construction needed by the site.
Last month, aiCIO revealed several European pension funds were investing their hopes in the UK consumer through real estate allocations. The Mars pension has bought three shopping centres so far this year, and the £13 billion Strathclyde pension is to convert a former sports outlet into a restaurant as shoppers abandon the high street for shopping centres and web-based purchasing.
ABF brands include clothing retailer Primark, Ovaltine, and Twinings.
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