Baar-Zug, 12 November 2009
Partners Group, the Switzerland-based alternative asset manager, has completed the implementation of a global private real estate portfolio for the Avon Pension Fund, which is administered by Bath & North East Somerset Council (BANES).
As part of a tailored global private real estate strategy, the Avon Pension Fund will participate in real estate secondary opportunities which will give the pension fund immediate exposure to the asset class, vintage year diversification and early distributions. Investments made by Partners Group in secondary assets have already distributed proceeds from two transactions only five months after the initial investment. The latest successful exit of an asset in China is likely to generate more than 4x the initial investment amount for Partners Group's clients.
The Avon Pension Fund will further gain exposure to highly attractive investment propositions in various markets around the globe. Investments in the Nordic region have already resulted in several distributions which have generated attractive returns for investors. The global real estate portfolio strategy also targets growth opportunities in emerging markets, where positive GDP growth, low levels of household debt and powerful demographic trends are likely to continue to be significant drivers of demand for real estate space.
The portfolio ramp-up for Avon Pension Fund's global real estate portfolio strategy additionally includes an allocation to Partners Group's distressed real estate strategies which intend to take advantage of the re-priced U.S. core real estate debt market by providing debt at attractive terms as quality assets with refinancing issues become available in the near future. A recent direct investment was the purchase of a residential loan portfolio with a significant safety cushion built into the investment case. Partners Group was able to purchase these loans at 36% of face value, representing a discount of 40% to fair market value.
Partners Group plans to make further investments with the Avon Pension Fund over time and looks forward to strengthening the relationship with its new client. With ten offices globally, Partners Group is well positioned to benefit from diverse opportunities in the global real estate market today and in the future.
Liz Feinstein, Investment Manager at BANES, comments, "The Avon Pension Fund selected Partners Group to manage its overseas property portfolio on the basis of their ability to add value for the Fund through a clear focus on achieving the best risk adjusted returns. In particular, the Fund favored Partners' global relative value approach using secondaries, directs and primaries to mitigate the j-curve effect, its long track record in global property, dedicated in-house legal and structuring expertise, and a strong global resource base."
Guy Waller, responsible for local UK authorities at Partners Group, adds, "We are delighted to work with the Avon Pension Fund, a leading UK public pension scheme, in further increasing its exposure to the private real estate asset class. We have approximately 20 UK local authority clients and are strongly committed to this market. We are currently seeing many prestigious institutional investors turning to the private real estate market to take advantage of these compelling investment opportunities."