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Islington to invest £20m pension fund money in housing

Islington Council Pension Fund has announced it will use £20 million of its £800m pension fund to invest with residential property investment manager Hearthstone Investments.27 Nov 2012

The fund will be the first London Borough Council pension fund to invest in residential property. The investment is aimed at reducing liabilities and boosting housing supply, Hearthstone said in a statement.

The majority of the fund's investment properties are private market, with some let to corporate tenants. Around half of the units are based around London and the south east. Hearthstone was picked by the fund following a tender process which it announced in June this year.

"Our decision to invest in residential property is based on careful analysis of the options," said Islington Council's executive member for finance and performance, Richard Greening.  "It reflects our view that investment in this sector will produce good long-term returns for local taxpayers and the members of our pension fund."
"We selected the TM Hearthstone fund because it is the only FSA regulated fund in the sector and is run by a team with considerable investment management experience. The fund offers a tax-efficient means for our pension fund to invest in the UK's largest asset class without taking on the risks associated with investing in housing directly or in smaller schemes," Greening said.
"We look forward to other pension schemes joining the fund and to starting a mass movement which will help to increase the supply of much needed new housing in our country."

"We are very pleased to secure this landmark investment by Islington Council pension fund," said Hearthstone chief executive Christopher Down. "Recent government and media attention has highlighted the opportunity for local government pension funds to play a role in the delivery of housing, a stable long-term investment which can support social objectives while delivering diversification to multi-asset portfolios.
"However, financial performance and the safe custody of assets for hard-working pension scheme members must remain a key priority. The result of this tender process establishes a clear benchmark in this regard, emphasising the importance of regulation, transparency and financial strength," Down said.