UK - The £1.3bn (€1.57bn) North Yorkshire County Council pension scheme is in talks to terminate a contract with ING Real Estate Select following the fund manager's decision to relocate to the Netherlands.

ING Real Estate Investment Management announced it would move the Select business to a Dutch location in December, which resulted in the resignation of CEO Nick Cooper.

New global head Jan Meulenbelt, with whom the pension fund held crisis talks in April, has since replaced Cooper. However, amid additional concern about market volatility from North Yorkshire's incoming investment consultant Hewitt, the meeting failed to reverse North Yorkshire's decision.

Documents from the North Yorkshire fund committee stated: "Due to the departure of key staff critical to the relationship with the appointed manager ING Real Estate Select the [pension fund] committee decided to terminate the appointment."

It added: "Property as an asset class has had an extremely volatile time and its future remains unclear."

The scheme also halted an additional £40m allocation to property due to the investment committee's discomfort with the real estate's 'extreme' volatility.

In a statement to IPE, ING Real Estate Select said it regretted North Yorkshire's withdrawal, adding that the scheme had changed its views on global real estate investment.

"

ING Real Estate Select is working with the North Yorkshire Pension Fund (NYPF) to accommodate its request to end the commitment to a Luxembourg based global real estate fund provided that they find an agreeable solution for parties involved."

The manager is yet to disinvest NYPF's money in an effort to protect the pension fund from falling real estate valuations around the world during the course of 2008 and 2009.



Jan Meubelbelt, CEO of ING Real Estate Select, said:
"We are obviously disappointed that NYPF has come to this decision, especially when we believe that our clients will benefit from the worldwide recovery of real estate markets. However, we are currently working on a mutually agreeable solution which takes into account the pension schemes long-term responsibilities to its members, and the position of the fund they've committed to and Select.

"We are mindful that there have been a few changes at a global level last year but we are pleased that the UK and European business have not been affected and continue to meet the requirements of our clients. We are committed to the growth of our global business and have recently appointed a global portfolio manager."

Separately, the county council scheme is searching for a fixed income manager for a £100m 'plain vanilla' corporate bond mandate.

The brief is for an actively managed bond portfolio with an objective to outperform the iBox Sterling Non-Gilt index by at least 0.5% a year over rolling three-year periods.

At the same time, European Credit Management (ECM) will transfer its £106m bond holding from its diversified European Credit and European Credit Luxembourg funds into a segregated investment vehicle which will eliminate the sub-investment grade holdings and reduce the level of gearing.

Hewitt is engaged in "a careful evaluation of the best way to deploy the assets currently invested with ECM".

North Yorkshire expects to have the new corporate bond manager in place alongside the revised ECM brief by November.

 

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