Teeside pension fund awards CBRE mandate

The pension fund with 61,000 members has picked CBRE out of a beauty parade to become investment advisor for its direct property portfolio.

CBRE’s Real Estate Finance team has won an investment management mandate from the Teesside Pension Fund to look after its £107 million (€128 million; $170 million) direct property holdings.

The firm said the role encompassed strategic property investment advisory work as well as property management with immediate effect following a competitive tender process.

Teeside’s fund is managed by Middlesbrough Council and holds direct property investments valued equating to approximately 4 percent of its portfolio.

According to the fund’s latest annual accounts, it has 43 percent of assets in UK equities, 41 in overseas equities, eight percent in bonds, and four percent cash.

It also said that in contrast to the previous two years when the fund “experienced something of a roller coaster ride”, 2010/11 was in  performance terms, a “relatively sedate year”.

It has moved strongly into equity markets, and continued to prefer equities to bonds as well as preferred overseas equity markets to the UK market, partly a result of concerns about Sterling.

Of particular interest, Teeside added it continued to look for opportunities in property as well as commodities and continued to be circumspect about investing in alternatives, “where the managers view that most alternative strategies were not right for the fund prevailed”.

CBRE said in a statement it would advise the fund’s investment panel on the construction of its property portfolio on an advisory basis. This will include devising and executing an investment strategy to help expand its domestic real estate holdings over the next three to five years. Specifically, this will incorporate advising on purchases and sales.

Tony Martin, executive director at CBRE Real Estate Finance, said: “Our objective is to drive the performance of the direct property portfolio and increase their exposure to property over the next three years.  We have grown our investment advisory mandates significantly over the last few years and now have broad spread of client types and instruction objectives.”

Fred Green, head of investments at Teesside Pension Fund, added: “Our intention is to grow our real estate exposure over time and the appointment of CBRE Real Estate Finance, which has a strong strategic real estate advisory track record, will assist us in achieving this objective for the fund.”