Pramerica Real Estate Investors has secured a new separate account mandate to invest £135 mln (EUR 156 mln) into UK ground lease properties on behalf of the trustees of a major corporate pension fund.

This follows Pramerica's announcement in August that it had raised an additional £98 mln of equity from institutional investors for its UK Ground Lease Fund.

Once fully invested, this new mandate, together with the UK Ground Lease Fund and other expected commitments, will bring Pramerica's total investment into this asset class to over £400 mln, reflecting the ongoing trend of investors moving out of investments such as Index Linked Gilts and corporate bonds, and into alternative investments such as ground leases, which provide the potential for better returns with similar levels of risk.

This represents the pension fund's first investment into UK ground leases, and it has mandated Pramerica to invest in both commercial and residential property in the UK with very long ground leases of over 75 years. However, unlike with the UK Ground Lease Fund, Pramerica will also be able to target assets with rent reviews of up to 15 years, as opposed to up to seven years.

'This investment provides further evidence of the growing trend amongst investors to look away from traditional products, such as Index Linked Gilts and corporate bonds, and look at alternative low risk investments with the potential for better returns and diversification, such as ground leases,' said Paul Dennis-Jones, Pramerica's director of UK real estate fund management.