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Hermes set for $1.4bn real estate spending spree

The British pension fund manager has hired a team from the Abu Dhabi Investment Authority (ADIA) to lead its push into global real estate investment.

Hermes, Britain’s third largest pension fund manager with £69 billion (€102 billion; $135 billion) of assets under management, is launching a global property investment program, its first focused outside the UK.

Hermes, which is owned by BT Pension Scheme and primarily invests on its behalf, already has approximately €6.2 billion of equity committed to UK property.

In a statement, Hermes revealed that it has hired several investment professionals from the oil-rich Abu Dhabi Investment Authority (ABIA) to achieve its global real estate aim. Mark Burton, currently chief investment officer of ADIA’s global real estate arm, has been poached to lead the investment drive. Mark Gilford, head of European property investments, and Neil Ross, chief financial officer of the real estate team, are also leaving ADIA to join Hermes.

The BT Pension Scheme is the largest in the UK. Hermes also invests on behalf of the pension funds of Royal Mail, Unilever, British Coal, Nippon Life, CalPERS and PGGM, as well as 39 local authorities.

Hermes’ chief executive Mark Anson said: “Like the US, the UK real estate market currently feels relatively fully priced and we believe that now is a good time for BT Pension Scheme to diversify its portfolio. Investing outside your home markets usually brings with it an additional element of risk and for this reason the acquisition of an existing experienced team with a proven track record was seen as a prerequisite for BTPS to widen its investment strategy into global real estate markets.”

Continental Europe and Asia will be the main focus, according to the pension fund.

The new team will report to Rupert Clarke, chief executive of Hermes Real Estate.

ADIA is the private investment arm of Abu Dhabi’s government, which owns oil reserves estimated to be worth $500 billion. It is controlled by Sheikh Zayed bin Sultan Al Nahyan.