Aviva Investors’ Real Estate Long Income team (RELI) secured a record £1bn of new capital commitments during 2020 according to figures released by the company today.

The investments came from a mixture of local authority and institutional mandates, with investors increasingly seeking resilient income streams that can also offer cashflow matching characteristics.

Of the £1bn, just over a quarter originated from public sector capital, including London CIV, with the balance from new and existing UK and European institutional clients.

The growth in demand for Long Income strategies saw assets under management for Aviva’s Long Income business pass £5bn, following acquisitions totalling £528m across the logistics, office, hospitality and residential sectors.

Renos Booth, Head of RELI at Aviva Investors, said: “2020 was challenging for markets, businesses, communities and investors, so we are pleased to have been able to deliver strong investment outcomes for our clients.

“The increased inflows into our Long Income strategies show that investors are increasingly attracted to the nature of these investments in the current low-interest environment.

 “We believe the relative value of the sector will continue to drive positive long-term performance, supported by yield compression and strong asset management.

“Long income strategies also fit well with our commitment to improving the ESG credentials of our entire real assets portfolio, with the long-term nature of the investments offering a platform to deliver meaningful societal change.”

Notable acquisitions by Aviva across 2020, include:

  • Three Next distribution centres, acquired in a sale and leaseback, in South Elmsall, West Yorkshire. The units are leased to Next Plc for 26 years, subject to annual reviews of CPIH+1%
  • The forward funding of a 132,000 sqft new office development on Bristol Business Park, pre-let to Babcock on a 15-year lease with five-yearly rent reviews to CPI+1%
  • Sale and leaseback agreements with two UK universities for multiple existing and newly-developed assets, on a long-term income strip basis
  • A 784,000 sqft Sainsbury’s distribution hub, in the West Midlands, for £139m, let on a 25-year lease with five-yearly rental reviews linked to increases in RPI

The growth of the long income business has been led by Aviva’s flagship Lime Property Fund (Lime), which passed £3bn of AUM in 2020, while capital commitments from the public sector now account for 54% of the investment.

Lime has been recognised by MSCI as the most secure and least volatile fund in the MSCI quarterly UK real estate universe, outperforming all the other long lease funds in AREF long lease index over 1, 3 and 5 years while also maintaining the MSCI highest risk adjusted return of all real estate funds over the last 10 years.