Real Estate | LGPS Institutional Masterclass

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  • 48 mins 46 secs

As local government pension schemes undergo a huge re-organisation of their investment portfolios, what does it mean for less liquid assets such as real estate? And does pooling actually make it more difficult to match objectives to member schemes? To discuss in this video are:

  • Andrien Meyers, Lambeth Council
  • Mike Hardwick, Investment Director, Property & Infrastructure, LGPS Central
  • Ian Mason, Portfolio Manager, AEW UK Real Return Fund, AEW
  • Martin Wheeler, Managing Director & Co-Head, ICG-Longbow


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Hello as local government pension schemes undergo a huge reorganization off their investment portfolios, what does it mean for less liquid assets, which is real estate ? And does pulling actually make it more difficult for schemes to match investment objectives ? Remember, needs ? I'm not colgate, and to discuss these, among many other topics, i'm joined here in the studio by gps experts on acid manages let's. Meet them. They are andrian mayors, local government pensions expert. Mike hardwick, investment director, property and infrastructure at central imation, portfolio manager at a, w. And martin. We love managing director and co head. And did i mention there in the introduction of a lot to get through the next forty five minutes ? But from your perspective on local government pension schemes, one of the biggest issues that of facing you ? Well, if we're talking generally in terms ofthe gps, the biggest issue would be the people which is pulling, and if we're looking specifically into real estate for those funds who already invested in real estate stamp duty would be a would be a big issue coming in there's also policy, depending on how government decided to play this a cz, you know, there's, a big push from government would regard to do infrastructure, however government do acknowledge that it needs to be investment needs to be done in the best interest of the scheme members, they would like for us to have a little bit more money in infrastructure, but depending on how that policy shapes, that could be a slight issue going going forward and also down to the individual schemes funds themselves as to what their membership profiles like and how they view real estate in terms ofthe income or in terms ofthe total return, so i'd leave it up. There for now, those, i would say, our three main challenges if we're looking at real estate in pulling context. Mike hardwick, your gps central. So you pulling is right at the center of what you're focusing on it. The moment it certainly, where are you on that journey when it comes to real estate ? I'm not sure, harry. Now, this works with all different pools, but for us, that's towards the back of the queue. Um, so we just kind of looks thie, part of funds and his prior to the set of off the official set of the pool, looked at what they got, hans, what they needed and how much they can save and how soon they can save. So they built a program around that, i think, for most funds that have real estate exposure. Generally it's it's, underweight thing that's kind of the norman in pension funds to target waiting, but i have an allocation haven't exposure, and therefore it's somewhere it was seen as they can wait a while on dh. Of course, the issue of stamp wass was there still is there, although we were here soundings that it's not the issue that we think it is. Okay, so lots of work still to be done real straight from the gps side of things turning to our asset managers in mason to pension schemes, particularly gps, came today to the real estate solutions that they've been using the past. Will those work in a new world of pulling ? I think they can do ? I thought, i think that's small element of just be careful what you, what you wish for because what investors now have in the way that the funding of industry has evolved, they have choice and investors are very much you know, they've moved away from investing into buckets and buckets of assets to investing very much in styles on the property industries responded, responded to that there's been a danger around polling if it's driven down the idea. That real estate is real estate is real estate. You can pull, you know you can pull it in tow. One one pool for central you capulet into one pull for for all of order the polls if you wanted to. But one portfolio can only have one one objective. What ? We're discovering when we talk about our sort of no riel asset property is a real asset. Strategy is looking. Looking at cash flow is that we are meeting local authorities who, you know their needs are very personal to the andi. You know, they have, you know, it's, not just a hunt for yield. Its they need inflation protection, have deficits to fill. You know, they have a need for cash flow. So, you know, if property just becomes property, then gps schemes will be denied, you know, potentially the choice that other other schemes are actually optimizing. Let's, bring you in on that. How is thie opportunity set for real estate ? Getting broader, given what ian's mentioned about the fact that you might have one pool, but it might have a number of mandates. It needs to hear it just once. So absolutely. The over the last. Ten years in particular, the range of options available to you investors in property has broadened. We see it. It's brought it into particular ways. One is focusing on the real estate itself. There's bean the emergence off what we call the alternative use class sectors. So that's things everything from student accommodation, which was probably first on the block through to the residential private rented sector. So that's giving i institutions other ways of getting direct property exposure. But then, across all the types of property, there are new ways of connecting with the returns coming coming out from them. So from our perspective, we've been heavily involved in the emergence of real estate debt as an asset class and that's that's something that ten years ago really didn't exist. A tall no institutional investors were taking part in it in the uk. So when you look at those two groups of new ways of investing together, they represent about three hundred billion pounds worth of exposure. And that's that's getting on for a third of the total real state investment assets in the uk at the moment. Everything there's. Lots of issues now for us to talk through the course the next forty minutes, that big one, just to start with the it wants the outlook for the real estate market at the moment, mike, you mention there are a lot of schemes of pretty underweight real estate, what's, what's, your feeling and gps central as a has. We still see this as having value. But from my own perspective, i look at where we are and look, you know, historically cycles of ten years on our fridge or nine, ten years, and we certainly that foreign there's some clouds out there, and sometimes we're focusing on the wrong clouds on when that's when we can get, um course, but a bit blindsided. Um, so i think i think relative to other asset classes, it still has attraction stars it's attributes that make you, you know, a valuable part of a diversified portfolio, but i think on an absolute basis, you know, with probability wise, we're probably into you have some sort of correction over the next two, three years, possibly sooner. Who knows ? I hope i haven't jinxed it by saying that, but but i think it would be naive to think that there will be no cyclicality and property going forward in picking up on that i mean, mike's point, a lot of asset classes are looking quite rich at the moment. A lot of people have they like the returns, but feeling a bit bit cautious about how how good it's been for world should investors feel that way about property ? My view on the market is despite all the uncertainties, no around the b word, the market does seem very, very robust. All areas of the market longley short short, leased, their strong demand that's good, i think the risks around that is if you are investing in property purely purely for yield because that's probably the thing that is that is he's going to he's going to adjust, you know, i have a view that once we're through brexit, we will then have certainty and then actually to your point, like the expression you can then start focusing on what's probably the more relevant clouds out there, which to my mind, is kind of the inevitability that interest rates do you have to normalize, they do have to increase that will impact bond bond proxies. It'll impact people just investing for yield if you're not, you know, so we're very much property fundamentalists, we invest in probably fundamentals for future growth, so we played a real asset class, so you build protection there because, you know, the next phase of the economy. Once people get over the shock that interest rates are going to go up is probably going to be, growth on growth is good, and interest rates go up. You know, when when, when you're when you're in growth. And if you are in real assets, that which property is you can then start to benefit from the rental growth that then then starts to come through. So the protections protections of their it's all about back to these strategies back to these styles, understanding what they're there to do on understanding the risks and the opportunities that each each of those actually actually poses. I want to move on the basic issues facing gps, and you think schemes undermining your connected with london, you connected with obama's pension scheme ? Are all of these underlying schemes in a similar place in terms of the demographics of the people in the pension scheme ? So so, if we're talking about demographics, memberships of the scheme itself has five point six million members as of the end ofthe march twenty seventeen, the important thing information over there is that only thirty four percent of those are actives, which means there's a big chunk off giffords and pensioners meaning total return argument verses income becomes more important, you'll find a lot more fund's looking for income because they're having a mature scheme. So if we use lamb, but as an example, that is certainly the case for us. For the first time ever, the land the pension fund went cash flow negative, and when i say cash flow negative, i'm not taking into account investment income. I'm just saying benefits paid versus contributions coming in. So one of the reasons why we went into you mentioned prs and the fun went into prs earlier this year was precisely for that reason, because when you have an aging, you're more mature fund, then all of a sudden start looking for that income and that's one of the reasons that that sentiment is pretty much across. Deal gps now there are funds which are cash positive, but the scheme as a whole is, i think, please don't quote me on this. I think we haven't wanted to the numbers for twenty eighteen yet, but i think the scheme as a whole has gone cash negative without investment income. And if you look at the scheme, asshole in terms of property were worked two hundred sixty billion i think about twenty billion is in property, so you will see the amount of money going into the property space increasing within the gps because off the membership profile changing, i think that's actually one of one of the challenges that traditional properly investing a god is that it it's perceived as being in that traditional growth bucket on that growth. Puckett these days means volatility, and it means total return. It doesn't mean income, therefore it's back to that sort of property is property is property, therefore its growth do you actually want ? Growth, but it isn't it's more than that, you have to hunt for it. You have to be, you know, almost willing to look for it. But their strategy is out there that actually we know a lot of local authorities pensions, games do need cash flow so good property managers respond by providing strategies that give you give you cash. But the challenge is actually getting someone to actually answer the phone is actually, you know, when you said hello, could i talk to you about property because of that perception ? And i think that's one of the key changes in our industry, if you like the asset management industry over over recent years, that maybe five years ago would say, hey, we've got a product to sell you but hit after speaking, speaking to our clients on the road on a rolling basis, we get to understand what client side requirement is so we can talk about solutions. Teo clayton riding a growth solution, teo close that close down. A liability gap or some income matching long long term liabilities on dh bye bye doing that by understanding the basic needs. Then you just got to go back. And look at your call skill set your core understanding in the market and work out how things could be repackaged. Tio tio, meet meet those requirements do you visit your world than martin, which is much more consultative it's a world of solutions rather than products where might could be on the phone saying, i've got this problem are you oversold the part of it ? So the practical realities are you can't each each investor clients will have a different set off solutions, and we can't. I really do want taylor to everybody but it's understanding, understanding where the bulk of the with the bulk of the solution is needed and trying trying to make sure we could create a package that is relevant to the majority ofthe pension funds on dh you know that i see you long, but we've got about two two thirds of our assets under management are managing on behalf of pension funds and sixty percent uk pension funds way being involved in the debate like i like to think we're at least aware ofthe issues, if not having got there to providing three ideal solution. Mike, from your perspective is you look at this, there must be things that will be wonderful if assets be their real estate, or anything else could do in terms of volatility, the yield they provide capital security and growth. How do you work out the differences in what you'd like an asset to be able to do for you, or a product, and what it realistically can do ? Because there must be a tension between those two things. We're probably a stage now when we're through a similar process, but obviously much smaller interment for a right funds on a part of funds. What what characteristics they looking for on. So how can we capture that in a way that will you satisfy everybody's individual needs ? And there will be some. You know, it's not going to be exactly matching what everybody's got, curly, that would be impossible. But i think we do have to get teo compromising. But there are things. The benefit for us is that there are a lot of tools for us to come up with that. That we can, you know, sort of tilt the shape of it. Teo. Ten have the funds wants but will that mean it will be one one size fits all a little individual schemes to be able to tailor to their needs for central pool that's to be determined, we would like to have the one size being appropriate for all but that's. That will be that's my job in the next a few months to establish what commonality can we get ? Two. Can we get to one fund fitting all or do we need to split it ? Split it like tio. Next programme should come back in a bit more detail to the pulling and some of the issues that that throws up on it. But just a quick aside before coming on to that, we hear a lot about these days. How important is is responsibility for local government pension schemes and has that affect what you're looking for ? Important it's, very important, actually, if i if i use lambert, has a recent example. So in the past, when you go to procurement, yes, jesus with end managers would acknowledge that it is important what we did this time when we went out to procurement is actually be look for something that's, more proactive from the managers and how they're building it into their process, whether it's, in terms ofthe going out to see a potential site with it in terms ofthe building that site and then looking forward, how they are looking at the sd implications going forward. So that was a key is calling criteria for us on a really good example. Is grace be so that that that is a good determined but the problem with that particular, if you wanna call it a k p i is that unless a portfolio is up and running with sufficient assets nineteen, twelve however many for you to assess that to get that recipe rating is a little bit of an issue. So if you're a new manager coming in and you have launched a new product the chances of you having that brisby rating in the first eighteen, twenty months off slim. But what we were looking for is that are you. Have you built that into your process and that's not just in real estate and assasin asked class that's overall because the scheme itself, when you look at the guidance that's come out, requires yes, you two play to play a part in part in our decision making that, aside from the investment, you have a lot of pressure groups which bang the drum. Yes, looking after the local government pension from there's quite a few f four eyes which come in which which we will will and we have been dealing with. But then you also have politics where depending on which political party is looking after a local authority, it might be part of their manifesto which drives that as well. So if you have political party that's choosing to bringing something specific for the entire authority, how is that impacting the pension funds ? Three different dynamics away, but purely from an investment point of view, i would like to think that funds going forward and going forward will see how managers are building that into the process ? I think the real estate industry as a whole has bean implicitly considering issues of sustainability ever since i joined industry in nineteen ninety, which was the year of landmark environmental legislation. But it's actually fought no formalizing that were have been signed up to out there responsible investment principles for two thousand thirteen and the benchmark. But i think it's making sure that we incorporate what we've done implicitly into our investment process, but i also understand that it's not just box ticking that's getting it right. That's got a real impact on the formance off off real estate and said the most obvious thing would be inefficient office building the cost it cost too much the heat because you got leakage results in a high service charge for your tenants, and that means you get less rent solo returns so it's, so it's, so it's in our interest to be not just finish filling the forms and ticking the boxes, but to be actively participating in debate and leading practitioners. One final quick questions section around investing in way talked about volatility. Is there anything you could do ? Is a fund manager ? To reduce volatility of capital in property or is that ultimately don't the market ? We'll try and answer that maybe volatility of returns, which is probably the same you it's on dh if way, if we look at the chart, you know, we can see that the properties total return over, you know, over the last thirty years has been very has been very volatile. A lot of that is, but the big constant through all of that year on year on year is income that drives it. A lot of that volatility comes from actually not focusing on the income, focusing on the total return or focusing on tomorrow's income, which you know, is there comes into your valuation it's a hope, and then if if rents fall, it goes away again, so values go up on values, values, values come down. Andi it's also very much history is very much sort of dictated by the benchmarking off p d who have done a fantastic job across the industry, but it'll focuses on shops, offices, on industrial, something called other alternative, which i'm sure will come on to talk about. But those three sectors are very sexy, very economically. As as the economy cyclical, then you know, it'll pick up that that volatility from the economy into into those assets. One strategy that we're pursuing is actually really to move away from the benchmark, which then allows you to move away from shops, offices on industrial, dominating your portfolio and concentrate on these alternatives. These others, which which are driven by, you know what's known as sort of a cyclical themes. So things like best illustrated, like it doesn't really matter what mark kearney does to interest rates. It's not going to change the demographic profile off this off this country, you know the need for, you know, aged age related care is just going to increase on dh. That is a level of demand that will just increase a straight line. So if you invest in that level of occupied demand, then you can help you avoid an awful lot of the volatility that that's going on in the economy. You can come. You can't take it out entirely because at the end of those property invested income and invest in alternatives. I want to move on to pulling on the impact that's having on real estate or perhaps is likely to have on real estate over the next year or two. One of the reasons of russian pulling is this idea of cost savings and efficiencies. How easy is it to bring fees down in real estate investment via pulling well, i don't think it it's as easy as some of the other asset classes you've got some from managers there, you complete way have again way can that there is a way, but it's not as easy as some off three other asset classes. So there's a few reasons. Number one end we already touched on this is each individual fund is looking for something specific. Yes, it's property, but going back to those to those clouds, you know, i might be looking for prs. You might be looking for a student accommodation. For whatever reason, you might want social housing, right ? So when we're talking about fooling, can we get consensus ? And if you look at london thirty two funds plus the city it's hard to get that consensus so that in itself is a challenge. So straightaway if there's no baseline. How then can you negotiate ? Aii a strategy which then leads on to a feat, right ? So that that that's a challenge in itself. The second challenge would be in terms of stamp duty. So understanding from government is that if you already have property within your portfolio, you run it off. And then when you're looking to make a new investment that's, when you do it by the pool now hopefully there's the door is a little bit opened when it comes to that aspect in london. This quite a few funds that are looking for prs. So if there's four five funds that come together, then we can say right rather than you get just my ten percent. And if you assume on average london fund is one point, two billion. Rosen, you just get one hundred ten million for me. There's four five of us, you're getting half a billion now we have some clout to say, right ? We're looking for the same product we're looking for. Similar tim, we're looking for you to deploy capital whatever within eighteen months or whatever it is we're giving you this money. How about we start negotiating ? Some fees and to an extent, that's already started. So i seen it at lambeth. When we've gone through our procurement exercise, we done something similar at the city of london, and there was hard negotiations on fees. The point being is that we would like for those negotiations to continue going forward, but being done, why the pools, which i think will be in a place in the next in my eyes in the next three to six years, i reckon if we're having this conversation, whatever the fees were being right now on property, they will be drastically reduced simply because of sheer scale. Mike, could you see a point where you is a bullet essential could palli up with another pool. So if if london could do five hundred million pounds property you plus central central plus you could do seven hundred fifty million truth way do already. And you know what ? What were insisting with manager is that they treat gps in terms of aggregating commitments that that's a big benefit that we're seeing, say, even before the official, a conception of the the various pools and that's something that we if we believe that pulls by pulling waken, get economies of scale way have to stick hard too. I'm sorry that's not gonna excite the other side of the table too much to hear that, but gritted teeth. No, you know that that's that's our obligation is to do i think i think we we can only drive by having that quantum behind, isn't it to take that that stance ? Um, you know it well, well, do with things when it went well, when when we may see new teams, we'll get preferable terms through that. So that there you know, that this the tools available to us, we just need to make sure we used them and that way do what designed to do. Can i just jump in on a point ? So if we really think long term because property is a long term asset class where a long term investor and you think off pulling long term and we're thinking about fi specifically the best way to reduce fees on property in house management. So if you think of the long term and you think the bulls are well established fifteen, eighteen years down the right line ? What's to say the pool your pool in fifteen years will not have the expertise to do it well, that that is a longer journey and that, but that is the journey we wanted to bring more, more of that in the house when it comes to asset management, that might be a little bit more difficult, but but it it's certainly thie aspiration that we want longer term fuck, i'm sensing two different models here that i'm sensing from you that you want to respect, you know, the choice of maybe someone prs and wanting some income and wanting some of that stars where you're very much down. What i say is the the disadvantage and the disenfranchising off that choice by simply saying, you know, as i describe it, will just form one big pull off property and it'll be property, and it'll just have a benchmark which may well work, but your, you know, i think if you look at unfairly objective objective about this is actually a w we're quite a new organization, so we're not defending a big legacy position with the local authorities. I mean, definitely if you formed a huge, great big segregated mandate a big portfolio you will you will find fi savings with the management that that is actually doing doing doing that, which is then the point. Well, why'd you stop it central, why don't you then just merge with another one ? Do what the government wants to do about infrastructure full former on absolute in a huge, great portfolio where the savings will be will be will be even more from our perspective. Actually, we see office. Obviously we are wary of feet, feet, discussions, but we see the biggest benefit in the polling having the clout paper, andrean's comment aggregated five hundred million pounds here. Can we talk about what the strategy is ? So we're able to offer offer a strategy that is closely aligned t the investing objectives of the group of pension funds that you represent. And so even in the world of prs, there are all sorts of ways of executing capitalizing upon that opportunity. And then along the way, we'd hoped to convince you that you three having access to our team who are on the ground, and then they got their own networks across the uk you do actually get that value from your party manager and you can get depth of experience, etcetera. But the biggest issue for us on the biggest benefit, wei, is being closer like tio. Understanding what the client requirements see. That's, that's, the keeper's. Two key words over there. You you mentioned choice. A new mentioned strategy. So if, as a group of investors we have sat down either with the pool to do that and we said, listen, there's five, six of us, we're looking for this strategy. You got that question answered after looking at all this different choice this strategy we want please go ahead and start the negotiations. It would make it so much more easy. But what we don't want is fun day talking to you about something from be talking to you about the same thing, but not knowing that fund has already done it. And then we have fully aware who has no idea that these two funds doing so ? Yes, if you go back to the principles of pulling strategy remains with the underlying funds. It's the implementation off that strategy that is done by the pool. So if the funds and you have a group of them with the same strategy than please pull. Go ahead and implement that for us and it will make everyone to work a little bit more easier. Kanada clear for vested interest here is a board member of the association of state funds where undoubtedly scale what will will get you say well, we'll get you cost savings. Will you get your value for money ? That's that's always the debated and it certainly in the local authority world, but certainly certainly with funds what you do get back to the g point on the g of that is very good certainly, if, you know if you remember of aref you'll be a member of the end of this, you do get good levels off governance, and at the end of the day, the performance that you get is triple that off, whatever those costs may well be a so you just need to bear that in mind. It is about, you know, and it's, not just about looking at the asset management it's looking at a lot a ll the fees and again back to that triple triple net point, a low asset management, you could be attractive, but then how ? How ? Else is that manager actually earning enough to actually make the mandate that viable. So the gps off very aware of that net or free performances. What we look at that's, where the court of transparency is coming, which deal gps started, which has been taken forward for the wider devi space. So not just looking at your performance. Feel your management fee. But all the other limits, which come in their second point i'd like to make, is taking that into account. There's, a working group that has been set up by government, which is looking at how we're going to monitor this in the longer term, with particular benchmark, leave it at that. But we are aware of it, and we are moving forward with certain initiatives. Right. Thank you for that now. The final part of program. I want to look at some of the alternative property that's that we've touched on it several times already. So what if i come to you first ? Earlier on you were talking about det. Talk us through it. What ? What ? How is it ? Probably the state was different from fixed income investing in debt. Weii, we see investing in real estate debt has just a different way of connecting with returns, the income profile that comes off from the real asset, but in a more defensive way. So with guilt, capital protection from from the downside really caused by the fact that, you know lending against all of the value of the property so, for example way offer different ways of getting invested, offering different risk risk return profiles. If you take our most straightforward a solution, which is what we call our senior det program, what we're doing there is creating individual loans that will have a loan to value exposure and no greater than sixty percent hand. The income services are. Our coupon is typically coming from a highly diversified group of underlying tenants, so, on average, across each load, we got fifty individual tenants paying the rent. What that does is give a very robust income stry for a certain period. Plus also the fact that we lend sixty percent against the value means that if the market went down by the same as it did in the financial crisis about forty percent, you'd still have not only all of your capital intact but also ordered the income. Britta so so that that's that's that at its most basic real estate debt as a fixed income solution that provides an enhanced return well vs vs liquid corporate bonds. But then we've got other solutions as well, way we're lending a higher percentage of the value of participating in the growth. That's created a property level through profit sharing feast that come at the end so that that then provide something that's more of a total total return fund or strategy, but where the bulk of the total returned are still come from from income i'm gonna play devil's advocate here if i may but bring bring my kid, but we keep it around fixed income of ways of getting in heart steal but still having a very safe. How do you assess things like that ? Because you started this house sounds really, you know, sounds very good, but i mean, how how do you work out whether it says good as lending money to roll that shell or some other part of the property market ? I think i'm looking at how the structure of the loan is in the security you've got against that, but but knowing that actually it is no, you're not looking at one entity with a credit rating that we pulled from bloomberg or whatever, but you are accessing different areas of the economy, of economic activity from different areas of the country. I can't say too much because, you know, part of phones in central pool once property debt to be in the fixed income come bucket. So so that's, why ? I said, you're bailey with it, it will be yeah, but i'm not in any way dismissing, dismissing it, you know, i can see that certainly there will be times where debt feels a lot more comfortable than being in the equity and the thing to remember about property there and the thing to remember about ordinary property it's asset. Backed on and it's. Just the difficulty of trying to sort of articulate the the risk off being asset backed versus the risk of actually going into corporate bonds. But we actually understand that awful lot better. It's, just interesting, that, courtesy of the global financial crisis, all the banks pretty much exited and awful lot, which is then opened up. You know, the ability for sentinel of the, you know, the life funds really started it come in, but very much as part of the fixed income desk on all part of that, that that hunt for yield is driving so many, so many strategies, it's. Still, the system still has a huge amount of debt. Is that there's ? About two hundred billion pounds worth of death in the system at the moment ? A two thousand three hundred sixty five so that's that de leveraging of the overall property market has meant that it's actually a safer place to be on operating, whether you're providing the debt or you're just just geared and doing an equity play. What's happened, though, is that as well as the aggregate amount of debt shrinking, it's changed the providers of that that has changed. So somewhere around about thirty percent of it now is coming from the insurers or pension funds on the whole pension funds doing it through managers like like ourselves it's actually interesting. I take it back to the actual investors at bay. So you mentioned that this dental form part of your fixed incomes. So if we listening to the principles ofthe what you spoken very much sounds like a choice for the for the investor, do i want realistic ? Sit ? Or would i wantto diversify my fixed income space and go with private debt ? Because the principles to an extent are similar ? So we looked at that at lambert and we went with both. So we went with prs and one hand. But then we went with private debt. So again, it's that element off choice, whether it's real estate or whether it's not lending tio washing machine company whose main clients, our hotels, it's, it's that particular choice but debt, as you say, is out there it's being there's, a lot of investors who want to put into it on get those screams but it's the choice again, i think that you know, coincidence that you two solutions you had prs on dh debt because they have different ways of solving slightly different abilities so that you fix that with more fixed income senior that that we write the investment grade is very much about capital preservation and highly predictable income stream that is fixed. But then our involvement in the bill to rent part of the pr est market is about creating long dated or potentially open ended super granular income streams that could be expected to grow over time and then therefore matching off or heading out. If you like inflation, inflation risk over time. One thing if you if you're raising money to build properties that people that read, mike is there. Is there a danger that you hand over money to someone and it's a year or two. Before you see bit of a bit of rent. Bit of yield. How does that work when you're trying to put us generally ? No, we've only recently met her first. Starting members ofthe central not central itself the first foreign enter into this area um, but generally you're kind of yeah, he often buying sort of off off plan with the developer, and they'll they'll build out it's not, you know, it's, not a two year process in general so they could put these buildings up in six months. You were often getting them is that they're you know, they're they're nearly a pc. So you know, it could be months before you start getting your first tenants. But obviously you need to get that up too. You know, full occupancy. It's not it's, not really a danger. It's it's more of an inevitability if that's if that's what you signed up to if you signed up to investigate bill to rent well, it's got to be built so there will be a period where you won't have income but your your your benefit from some uplifting and some capital profits portfolios have traded as one on there that's a market that is building simply down if that's what you want, then if you don't want that on your point of entry is into a mature portfolio which is just fully income producing, but he returns it going to be a lot, i think that's that's one of the reasons to get involved in building rather than just the arrest buying the end product because there's very little off it and in our experience when we've helped develop it and then sold to institutional investors, it's a very competitive what big process that we couldn't run, so getting involved at the beginning helps you take control if you like off delivering the type of asset that you want, but also the value creation in the development process itself means that you are in haunting returns, but you get to keep that developers profit wave witnessed on the other side when we've bean bean selling complete completed schemes. So then what you're doing is is having to work out which bits off the best potential market you're you're targeting, and there are some parts of the market that it does take potentially years to get from buying a sight through to it being income producing is that they tend to be the big cities city centre sites with high density apartments. For our part, we spent a lot of time looking looking around those two walking out what the optimum solution is getting getting to the end in creating and creating a year old quickly and ideally creating a stronger year way found that in creating family family housing so on regional basis throughout throughout the uk so you get high yield at the end than thie big urban motto. But i think probably more important dynamic as you get there faster because you can by sight get on site, start building it within a month and it'll be income producing within a year just that we're almost out of time. So quick too quick questions first one to you and you mentioned earlier about infrastructure and the government office. Keane, this pool of capital in the pension schemes is used in infrastructure and building. How do you marry out what the government's desire is to do with pensions, money with what's in the best interest of pension scheme ? The minister i made it very clear to fearless local government policy conference a month or so ago that when funds decided to invest in infrastructure, they need to make that strategic decision based on their front so there's no direction given. By government, which says you have to what he's saying is you look at your membership, you look at the investment strategy for your fund. If infrastructures not appropriate, you don't have to. If it is, then we'd like for you to go in. He also gave a word of caution, which said that when he, when we look at similar schemes like the gps worldwide he fails to understand, i fail to understand is how come they have a bigger percentage off investments in infrastructure ? Then we do so if there's an opportunity based on the needs of the front, then we should to that extent there's been a definition given for infrastructure within the guidance and certain asset classes within infrastructure that will form that being one road building a school, just do an apple. So so there there is some guidance that has been given, which would form, but there is no explicit instruction, which tells us we have to do it's based on if the fund needs a turn on mike in terms of putting money into new developments, we would your gps central field ideally, you want to put them in developments that aaron geographic areas where your underlying pension schemes are, would it be absolutely fine if they were in glass go in northern ireland ? Amanda, i think everybody you know, remember, most trustees are local councillors and would love to see money investing their area. But when we have got is all of those same trustees recognize that there's a fiduciary duty, and i think that's the benefit ofthe sort of passing the baton to the pool's is that they can take a more objective viv and props, you know, with without any sort of political corrosion. So there's less room for that, not that not that ever really existed, but i think, you know, i think it takes some of subjectivity out of it that makes it a more objective choice. I'm coming, coming on that azan investor in alternatives i'm mohr drawn to the actual social need because it's been there for a long time. You know, there's a third of whatever it is the working population has to. Rann has always that happened pacto to rent them. They may and should the sparta but they never managed managed to do that. So you know things like supported living in extra care. You know where there is that really need my mind provides good, sustainable income. We're out of time. We have to leave it there, gentlemen. Thank you all very much, and thank you for watching from all of us here. Goodbye for now.