ACCESS Pool Investment Manager for Real Estate - UK Core

Concepts

• pension investment
• norwich
• northampton
• chelmsford
• newport
• hertford
• lewes
• maidstone
• cambridge
• winchester

Location

Leicestershire, Rutland and Northamptonshire:

Description

The Authority is seeking an investment manager to manage and grow the assigned UK Core Real Estate mandates of the ACCESS pool members. This procurement is being undertaken by Hampshire County Council (the Authority) on behalf of the Administering Authorities who together comprise the ACCESS Pool. The ACCESS Pool is a collaboration of 11 like-minded Local Government Pension Scheme Authorities, investing the pensions of over one million members, delivering strong investment performance, achieving greater cost efficiency and benefiting from the best of local authority procurement.

Total Quantity or Scope

Hampshire County Council is running this procurement on behalf of ACCESS pool and is seeking to appoint an investment manager to manage and grow the assigned UK Core Real Estate mandates of the ACCESS Pool members. The procurement will be carried out as a two stage Restricted procedure. At the conclusion of the procurement procedure, each named Authority will enter into its own contract with the successful Supplier at their own discretion. The duration of the contract(s) shall be thirty (30) years, subject to a five (5) yearly review cycle during this period. Full details of the requirement can be found in the Specification at Annex 1 of the ITT documentation by registering within Hampshire's instance of the In-Tend e-procurement platform at the following URL: https://in-tendhost.co.uk/hampshire/aspx/Home Additional information: Note: The stated contract value is an estimate of fees payable over the life of the contract based on anticipated mandate size and maximum fees set out in the Pricing Schedule. The actual fees payable will depend on these and other relevant factors applicable over the course of the mandate. This amount should not be taken as a guaranteed value or payment. Specifically, the estimated total contract value shown above has been derived by making a number of assumptions at the time of writing, which include: the authorities' current exposure of £4.9 billion as initial assets in the mandate; a contract length of 30 years; a maximum blended fee rate of 50 basis points; a constant asset growth assumption of 6.0%. p.a. It should be noted that in practice the actual levels of assets, fees and growth rates are highly likely to differ materially from these assumptions over the term of the mandate.

Award Detail

Renewal Options

Across the 11 ACCESS Authorities there is currently a total aggregated exposure of c. £4.9 billion to UK Real Estate, relative to a target exposure of c. £5.8 billion (this is based on each Authority's current strategic asset allocation and latest overall portfolio valuation). Of this existing c. £4.9 billion exposure, four Authorities have direct UK core property portfolios totalling c. £2.5 billion and the other seven Authorities have indirect UK core exposure allocations (via fund of funds allocations or single fund allocations) totalling c. £2.1 billion. In addition, c. £0.3 billion in aggregate has been allocated by some Authorities to alternative UK strategies via single-fund allocations. The current expectation is that the c. £2.1 billion indirect UK core exposure will create the foundation of the ACCESS pooled UK Core Real Estate mandate. The respective Authorities are expected to redeem from their fund of funds allocations/ single fund allocations and invest the redemption proceeds into the pool. However, although possible, not all the c. £2.1 billion indirect UK core exposure is expected to be transitioned to the pool. There are some existing allocations which are not expected to be redeemed initially, and it is also expected that some of the redemption proceeds may be allocated to a separate ACCESS UK Alternative Real Estate solution. There is scope for the total mandate size to significantly increase in scale (and - although unlikely based on information available currently - to possibly decrease), both initially and throughout the life of the mandate, due to the following factors: i. Authorities are currently undertaking reviews of their strategic asset allocations following the 31 March 2022 triennial actuarial valuations (these are expected to be completed by Q1 2023). The results of these reviews may affect each respective Authority's target allocation to UK Core Real Estate. This may have the impact of further increasing the capital that Page 13 to 16 Authorities will collectively allocate to the UK Core Real Estate pool (it is also possible that the results may lead to a decrease in the amount allocated). For context, were each Authority with existing indirect UK core real estate exposure to increase their target exposure by 1%, this would result in an additional c. £0.3 billion being potentially available to be allocated to the pool. ii. It has been assumed that a portion (c. £0.3 billion) of the total redemption proceeds from the existing indirect UK core exposure will be allocated to the ACCESS UK Alternative Real Estate solution. However if this does not turn out to be the case then this will likely be allocated to the ACCESS UK Core Real Estate mandate. iii. Based on discussions with some Authorities, it has further been assumed that c. £0.3 billion in existing single-fund allocations will not be redeemed immediately for strategic reasons. However if this does not turn out to be the case then this will likely be allocated to the ACCESS UK Core Real Estate mandate. iv. For the anticipated initial mandate size for the pool (£0.75 billion - £1.25 billion) the low end of the range has been determined by assuming that only around half of the expected redemptions will be transitioned to the pool i.e. there is scope for an additional c. £0.75 billion to be allocated to the pool if all respective Authorities ultimately decide to transition. v. In addition to the seven Authorities with existing indirect UK core exposure, there are four further Authorities who have existing portfolios of direct UK core exposure. As noted previously, it is anticipated that initially one of these Authorities may appoint the investment manager to the ACCESS pooled solution to manage its own direct holdings. However, over the life of the mandate it may be the case that one, two or all of the other three Authorities will seek a similar arrangement. Across these three Authorities, the current aggregated market value of their direct UK portfolios is c. £1.8 billion.

Award Criteria

CPV Codes

• 66131100 - Pension investment services

Indicators

• Options are available.

Other Information

Further information regarding the ACCESS Pool can be found here: https://www.accesspool.org/. ** PREVIEW NOTICE, please check Find a Tender for full details. **