The Local Pensions Partnership (LPP) has created a £1.2bn property investment pool to increase exposure to UK commercial and residential property.
The pool has combined London Pension Fund Authority (LPFA) and Lancashire County Pensions Fund's (LCPF) existing core property allocations while adding specialist income to create the vehicle.
This £1.2bn pool comprises £550m from LCPF, £300m from LPFA with an additional £260m for specialist income strategies.
Knight Frank Investment Management (KFIM) will manage investment of the £850m pool through a combined mandate from LCPF and LPFA.
The remaining £260m is in other funds run by a mix of managers.
LPP managing director (investments) and co-chief investment officer Chris Rule said: "This allocation extends further the strategic partnership between LCPF and LPFA through the Local Pensions Partnership. We're pleased to not only be talking about collaboration and pooling across the LGPS, but actively engaging in it."
A spokesman from LPP added: "LPFA made a decision to increase its exposure to UK commercial and residential property at the end of last year, and this is just part of our ongoing pooling activity with Lancashire. There's no significance around timing. We continue to work on a number of things but no set announcements have been decided as yet."
Examples of property investments includes LCPF's Gatefold housing development in West London, which opens later this year.
There are also student housing and retirement home investments such as LPFA's investment in East London housing development project, Pontoon Dock.
LCPF has £300m invested in affordable and shared ownership housing through its debt financing of Heylo Housing.
The Local Government Pension Scheme (LGPS) is undergoing reform to turn what are 89 separate funds into bigger wealth funds which can invest in infrastructure.
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