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UK Pension Plans Seize Opportunities in Real Estate Amid Market Turmoil

Amidst a wave of selling by fellow pension funds, some of the UK’s largest pension plans are diving into the secondary market to snap up real estate and other private assets at steep discounts. The Pension Protection Fund (PPF) and the Border to Coast Pensions Partnership are among those taking advantage of the current market conditions.

The PPF, with £32bn in assets, recently acquired part of a property fund at a 35% discount to net assets from another pension fund. Chief Investment Officer Barry Kenneth stated that they were offered the discount and did not negotiate for it, showcasing the favorable market for buyers.

With the PPF allocating up to £350mn for property investments, they are actively seeking opportunities in the secondary market. Other pension funds are also eyeing private assets being offloaded by defined benefit pension schemes as they prepare for potential buyouts by insurance companies.

Christian Dobson from Border to Coast highlighted that they are focusing on private equity secondaries but are considering opportunities across private credit and infrastructure spaces. Despite the discounts available in the market, the interest from pension buyers is helping narrow some of the price markdowns.

Overall, the current landscape presents an attractive opportunity for pension funds to diversify their portfolios and capitalize on discounted assets. As the market continues to evolve, pension schemes are strategically positioning themselves to benefit from the ongoing market dislocations.