There is also the benefit of the natural caution that valuers tend to have on property fund valuations. “They tend to be extremely prudent, so when you come to sell you are automatically getting a little bit of value over that,” Whitfield says. Value is a big part of the management of these assets.
RPMI Railpen’s core investment themes include affordability, creativity and connectivity. It looks for assets and projects in areas of strong occupational demand, selects the right stock and then creates value. This typically involves lease extensions, extending the assets, refurbishment or a change of use.
“In a relatively low return environment it is key that asset management drives performance,” Rule says. For Rule, sustainability is a big part of managing her portfolio.
“It is not just about delivering attractive risk-adjusted returns for our members; I am keen on investing in strong economic assets in the areas where we invest. That is a big point for me, i.e. making things better for the future generations,” Rule says. “We look to invest in economically, socially and physically-relevant investments. We are all about investing in buildings and locations where people want to live, work and play.”
Whatever purpose it serves and wherever it might be located, property is becoming a mainstream pension fund asset. “From what I have seen in Lancashire and London, property, infrastructure and the like are well established parts of the investment landscape these days,” Tomlinson says.
Whitfield concludes that property has underpinned his scheme’s investment strategy for almost 15 years and that long-term investors with a need to generate regular cash-flows could be missing out if they are not exposed to bricks and mortar. “I would invite others to have a much closer look at and see if their property exposure is as extensive as it might be.”
