Five LGPS funds back residential property fund

December, 2017 Print

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Five local authority pension funds – Derbyshire, Nottinghamshire, Staffordshire, Teesside and West Midlands – are investing £100 million in the Hearthstone Residential Fund 1 (HFR1).

The fund is a ten-year, closed-end vehicle which will invest across UK regions where there is, or is anticipated to be, strong rental demand. The fund will build and manage houses and apartments for families and young professionals. The fund aims to produce an annual net yield of 4% after costs, with capital appreciation. It is hoped to raise £200 million in total with a final close in November 2018.

Hearthstone Investment Management Limited partner, Cristoforo Rocco di Torrepadula, commented: “We see an opportunity to focus on regional centers of economic growth which are undersupplied with good quality rental accommodation. This is also an opportunity to bring institutional-quality management to what has been to date a generally poor quality consumer product. We are particularly delighted to be working with a group of local authority pension fund investors.” Staffordshire Pensions Panel chair and leader of Staffordshire County Council, Philip Atkins, said: “This is an opportunity for funds to make an investment that firstly meets our investment requirements, but also contributes in a small way to the housing need of the country. The Hearthstone Residential Fund 1 will provide a reliable income stream over the next decade while the underlying assets will act as a hedge against inflation.”

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