Aviva looks to Eversheds Sutherland to help secure industry landmark

REALTAF, which has been structured as a tax transparent authorised contractual scheme, is the first of its kind to invest in real estate and is the largest LTAF to reach the market, with an initial seed portfolio of over £1.5 billion in real estate assets, funded by Aviva UK Life. REALTAF was approved by the Financial Conduct Authority (FCA) in March.

The LTAF is a brand new category of authorised open-ended fund, designed to allow, for the first time, authorised funds to invest in more long-term illiquid assets. It was one of Prime Minister Rishi Sunak’s fundamental initiatives (introduced when he was chancellor) to channel institutional money into under-invested assets.

The aims of the LTAF are two-fold: to combat the inflation risk faced by defined contribution (DC) pension holders (many who have several years before retirement); and, through its selection of assets, to support future economic growth and financial stability.

Katie Taylor, a Principal Associate in Eversheds Sutherland’s financial services group, led a 10-strong-cross-practice legal team to ensure a successful FCA approval process and fund launch. The team comprised lawyers from across the global law firm’s funds (both authorised and closed ended), regulatory, compliance, tax and real estate capabilities.

REALTAF will collectivise an initial seed portfolio of carefully selected real assets, in various forms. The flexibility of the LTAF regime allows pension investors to invest in such assets more easily and with appropriately matched liquidity.

REALTAF will also support Aviva’s goal to help the UK become the most climate-ready advanced economy, under the fund’s over-arching sustainable investment strategy, which includes review of carbon emissions generated by the buildings, in addition to net zero and social audits.

Katie Taylor, Eversheds Sutherland, commented:

“We first began working with Aviva on the REALTAF back in December 2021, shortly after the new rules first came in. We’re thrilled to have worked with them on such an innovative and exciting fund, and to have been part of something of such magnitude for the industry. It’s been an absolute pleasure working so closely with Aviva on this and we’re looking forward to continuing to support them on this very exciting journey.”