Derek Gilby is head of long income and Sammie Stanton a fund manager at L&G
As part of our series looking at what firms did to win their accolades at the PP Investment Awards 2024, PP speaks talks to Legal & General head of long income Derek Gilby and fund manager Sammie Stanton about winning the Long Income Property Manager of the Year accolade.
What does it mean to win this award?
It is fantastic recognition for our Long Income team as well as our wider L&G private markets platform. This award demonstrates the hard work, commitment and innovation of our team, at a time of intense industry change. Our business takes a very pure approach to managing long-income assets, with a strong focus on income resilience. We believe that this has been a key factor in ensuring that the fund has continued to perform well and is well-positioned for potential growth at the current point in the market.
What do you believe sets you apart from your peers?
L&G has a market-leading long-income business with over £7bn in assets under management. In recent years, this has differentiated itself through rapid modernisation of funds in the wake of market change, including providing access for DC investors and aiding wider group pension risk transfer (PRT) transactions.
Despite market change, the long-income business has continued to secure suitable investments with inflation-linked income streams backed by strong covenants, facilitating impactful investment for our clients with ESG and urban regeneration benefits. Our long-income business is also stand-out through its portfolio selection and creation.
On acquisition, assets have a minimum 20-year lease with an income stream backed by investment-grade credit, each mandate consistently ranks among the highest for income quality by MSCI. Social impact plays a key role in our fund, utilising the unique nature of long-lease property to deliver social impact through occupier and community engagement. As an organisation, we operate a dedicated long-income transactions team and a fully independent credit ratings team. These teams ensure that our process is robust and that we are seen as a partner of choice. This ensures that our asset sourcing ability is second to none.
How do your investment strategies help pension schemes meet the challenges they face?
Our offering of secure income through a portfolio of long-lease property weighted towards alternatives, combined with our investment grade occupiers provides schemes with stable income and a potentially lower-volatility return profile than the wider property market. L&G's LPI Fund has responded to the evolving pensions landscape, by updating the framework to facilitate capital allocation from certain DC investors which previously had not been possible.
The fund has subsequently been successful in raising well in excess of £500m of investment from DC clients since Q1 2023 and is expecting to see this grow steadily. In turn, we provide DC savers access to the potential benefits offered through investing in long-lease property. In addition, the long-income team has been delivering for our PRT business. Over the last 24 months, the expertise of the team has also facilitated the transfer of c.£630m of in-specie real estate assets. This has supported PRT acquisitions led by the wider L&G Group, facilitating demand from corporate DB schemes to de-risk. This approach meant that underlying assets did not need to be liquidated, which could have been detrimental to value, therefore ensuring a better outcome for these clients, both operationally and economically.
How will you continue to improve your investment offering over the coming 12 months?
For our LPI fund, we will continue to seek out opportunities for new mandates and capital raising, focusing on diversifying our capital base across DC and LGPS. We also think that the corporate DB market remains important despite the overarching focus on buyout.
We expect to acquire assets which align with our house views on growth sectors, such as alternatives and industrials, as well as providing an opportunity to further evolve our social impact strategy. We are incredibly proud of our achievements this year and over the longer term and this should provide us with a springboard for further growth and the continued ability to deliver inflation-linked income for our investor base. We are grateful for the trust placed in us by our clients and hope to be able to celebrate further successes over the coming year.
Legal & General also won the Target Date Fund Manager of the Year category at the awards. Read about how they won this award here.
The winners of the 11th annual PP Investment Awards were announced at a reception in London on 20 November. To see the full list of winners and find out more about the awards, visit: www.investmentawards.co.uk
