Royal Mail Pension Plan invests in domestic property
On the go: The £12.5bn Royal Mail Pension Plan, comprising the £11.2bn Royal Mail Group section, the £733m Defined Benefit Cash Balance Scheme section and the £461m Post Office Limited section, has invested in Wayhome, a UK property company that encourages gradual home ownership through a hybrid rent and buy model.
Speaking during the Pensions and Lifetime Savings Association’s Investment Conference 2021, Krzysztof Lasocki, investment manager at RMPP, revealed that the scheme became interested in Wayhome around 18 months ago.
“What we liked about Wayhome is the social impact, the inflation-linked contractual revenues and downside protection. This illiquid investment expects a low correlation with many of our existing investments,” he said
“We have not seen an equally good opportunity to access the UK residential property market. [While] we are positive about the UK economy, the residential market is very tricky to access as institutional investors.”
Lasocki also noted the different risks with this type of investment, highlighting reputational risk as one. “Any investment including a consumer is invariably tricky and needs to be carefully considered,” he said.
Referring to the social aspect of the scheme, Lasocki said that environmental, social and governance factors are “hugely important to the scheme and everything that we do. We are one of the leading pension schemes in this space”.
He added: “While we do not have a knee-jerk, exclusions-based policy, ESG is present at all times of our decision-making process. Our approach is based on three pillars: engage, impact and hedge.”
This investment was an opportunity in the impact space.
The social aspect of ESG is often overlooked, Lasocki said, adding that the scheme saw Wayhome as a niche in the UK property market and so “we decided to explore the social impact potential”.
“We cannot fix the arguably broken property market with just a little money, [but] you can certainly impact the lives of many working families with that money,” he added.
Wayhome plans to buy 200-300 properties over the next three years.
During the conference, Lasocki also said that the scheme speaks to a lot of managers, many with appealing investment ideas, but most of them do not make it to the scheme’s portfolio because either they “cannot add much value to what we already have, or do not tick all the boxes we need at the time”.
Mercer Investment Consulting is RMPP’s main strategic adviser.
This article originally appeared on Mandatewire.com