KBC buys €462m UK fund

KBC Asset Management has bought a €462 million British commercial property fund along with its management team.

The purchase of Lothbury Property Trust is the first acquisition by KBC's Irish asset management operation since it bought Ulster Bank Investment Managers in early 2000.

KBC Asset Management chief executive Mr Sean Hawkshaw said the acquisition was a welcome move that would allow KBC offer a wider range of property investment options to its client base of pension funds.

"We are delighted with it," he said. "It is a chance to bring an additional capability to our clients at a time when there is a lot of focus on property."

KBC operates an Irish property fund valued at €213 million.

Mr Hawkshaw said the UK property market currently offered a higher yield to investors. It also benefits from a lower rate of stamp duty - 4 per cent compared to 9 per cent on similar investments in Ireland.

"The duty in Ireland is quite severe and is effectively a tax on pension funds," he said.

Lothbury's portfolio of properties is spread across London and the regions. It has a focus on retail property, which comprises 49.1 per cent of the assets, with offices accounting for 27.7 per cent and industrial property holdings 21.1 per cent.

Property unit trusts as a sector have provided better returns for investors over the last one, three, five and 10-year periods than direct investment in commercial property, according to Investment Property Databank.

"This acquisition from CBRE Investors gives us both the mandate and the team of 13 who have been managing the fund for some time," said Mr Hawkshaw. "They have a top quartile record in terms of managing it according to UK property surveys."

KBC will transfer the trust and its team to its KBC (UK) subsidiary, which markets the Irish group's products and services in the UK. KBC is the fourth largest Irish asset manager, with €7.1 billion in funds under management. It is a subsidiary of Belgian financial services group KBC.

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