The Universities Superannuation Scheme, the UK’s largest private pension scheme with £76.8 billion ($103 billion; €88.4 billion) in assets under management, has entered into a joint venture agreement with Fiera Real Estate to develop small-to-mid-box industrial properties across the UK.

USS is reportedly investing approximately £500 million in the venture. Both USS and Fiera declined to share any financial details.

The JV is targeting acquisitions of up to £50 million per site and is currently under offer on two sites in the Southeast with a gross development value of more than £100 million, according to an announcement. The partnership will target brownfield and established sites in core urban areas and aims to develop multi-let industrial properties of up to 250,000 square feet.

The JV is targeting an IRR of 15 percent-plus for its investments, and intends to develop between 15 and 20 projects in total, according to a source familiar with the matter. The use of construction financing will be considered on a case-by-case basis.

The investment vehicle is managed by Fiera Real Estate UK, the European real estate arm of Canadian manager Fiera Capital, and has an initial term of five years.

In February of last year, Fiera’s UK arm closed its first logistics-focused fund and largest-ever closed-end vehicle, Fiera Real Estate Logistics Development Fund UK, with £250 million in commitments for the value-add strategy. At that time, Fiera returned to market with the successor fund, for which it set a target fundraise of between £200 million and £300 million, as PERE reported.

It is understood that shortly after this point, however, Fiera pivoted its approach from raising a follow-on commingled fund to establishing a JV partnership.

“We reviewed a variety of funding options for this vehicle and favored the advantages of deploying this small to mid-box development strategy with a single partner. USS stood out as the capital partner which had the greatest synergy with our investment goals and approach,” a Fiera spokesperson shared with PERE. “Our JV structure enables us to take advantage of market conditions and capitalize on attractive price dislocation at this phase of the cycle.”

Development push

USS has a long track record of investing in industrial real estate, having amassed a £1.5 billion portfolio. Overall, the investor has £5.3 billion invested in property, according to its website, predominantly in core UK assets.

PERE understands that USS is selectively looking at making further value-add investments across other property sectors, both in the UK and internationally, as it seeks to refresh its existing portfolio over the coming year. For its UK property portfolio, the investor prefers to invest directly or through partnerships, in particular where more specialist resource is needed.

Data centers is another sector in which USS has been active on the development side in the past year, committing up to £250 million to invest in Blackstone’s £10 billion hyperscaler campus in Cambois, Northumberland. The investment was made through USS’s infrastructure mandate, as the associated greenfield risk was deemed a better fit for the fund’s infrastructure objectives, as PERE reported at the time.