Legal & General's industrial fund merges with Falcon.
06 September 2013
Legal & General Property announces that it’s Industrial Property Investment Fund (“IPIF”) has merged with the Falcon Property Unit Trust (“Falcon”), having successfully entered into an Amalgamation Agreement. Completion of the transaction is anticipated by the end of Q3 2013. The amalgamated fund will be called IPIF and will continue to be managed by Legal & General Property.
With a GAV of just over £100 million, Falcon comprises 36 multi-let estates and over 280 units. As at 31 June 2013, IPIF had a GAV of £794 million, holding over 13.6 million sq ft of space, let to almost 1,600 tenants, across 121 estates. The enlarged IPIF will therefore have approaching £900 million industrial assets, making it the largest UK industrial specialist fund.
With complementary investment strategies and portfolios, the amalgamation offers IPIF with an attractive range of tenants and estates which will benefit from scale and intensive asset management, thereby enhancing its returns going forward. Furthermore the ungeared fund provides IPIF with an enlarged and therefore diversified investor base. The proposal to amalgamate IPIF and Falcon received 99.9% approval from both vehicles’ investors and has been structured to be cost neutral for IPIF.
Launched in 1997, IPIF was one of the first indirect specialist real estate funds and has become a leader in its sector, having outperformed its benchmark, the IPD Quarterly Industrial Benchmark, over three, five, 10 and 15 years. The lowly geared fund is one of the most liquid closed-ended funds in Europe, benefiting from a strong secondary market with approximately 5% of its units traded each quarter.
Its strategy remains focussed on investing in good quality, higher yielding, predominantly multi-let industrial estate assets, with a high weighting towards London and the South East, but ultimately will be opportunity led. Supported by Jones Lang LaSalle, it is managed by a team of 40 professionals across both firms. Much of IPIF’s success lies in the hands-on, efficient management of its tenant relationships and a continuing programme of new lettings, lease renewals and rent reviews.
Jonathan Holland, Fund Manager of IPIF at Legal & General Property, said: “Falcon has built up a strong portfolio of multi-let industrial estates which we believe will significantly benefit from the scale, resources and efficiencies of IPIF’s management intensive structure, whilst increasing IPIF’s already large added value pipeline at an opportune point in the market cycle. Furthermore, with a strong and proven track record, IPIF has outperformed the market every year since it was established and continues to drive returns through its sector specialist, hands-on approach to managing tenant relationships.”
Dan Batterton, Business Development Manager at Legal & General Property, added: “As an initiative that was led by investors and was achieved by the boards of Falcon and IPIF working together in a truly collaborative manner, we believe that this amalgamation provides an attractive solution to both parties whilst providing IPIF with considerable asset management opportunities going forward.”
Robert Farnes, Chairman of Falcon, commented: "Although Falcon had been performing well, consistently providing unit holders with a distribution yield in excess of 6%, the Trust had become dominated by a small number of advisors and, with a GAV of just over £100 million, a merger was considered the most attractive solution. The level of support for the amalgamation terms is a clear endorsement of Board's policy to provide a solution that gave all of its unit holders the long term option of remaining in a high performing industrial property unit trust or taking cash.”
Taking a new approach to achieving best practise standards of corporate governance, IPIF recently successfully extended its life to 2020, whilst also adding redemption provisions and introducing a number of initiatives enabling it to be more flexible in terms of raising further equity and responding to market conditions.
Notes to editors
Legal & General Property
Legal & General Property (LGP) is a wholly-owned subsidiary of Legal & General Investment Management (LGIM), one of Europe’s largest institutional asset managers and a major global investor. LGIM manages approximately £433bn in assets on behalf of more than 3,100 clients (30 June 2013) and provides products and solutions spanning all asset classes. LGP is the third largest institutional property fund manager in the UK, managing or co-managing 16 separate funds or vehicles and two segregated mandates with an aggregate asset value of £11bn as at 30 June 2013. These funds include:
Specialist Pooled Funds
The Leisure Fund Limited Partnership; Industrial Property Investment Fund; Arlington Business Parks Partnership; and the English Cities Fund
Single Asset Vehicles
Bracknell Regeneration Partnership; Central Saint Giles Partnership; Performance Retail Limited Partnership and Warrington Retail Limited Partnership
Life Fund; Linked Pensions; Linked Life; Managed Fund; Property Unit Trust; UK Property Income Fund; LPI Income Property Fund and the Hybrid Property Fund.
LGP’s UK-focused fund management platform has built and retained a strong track record of out-performance across the sector. Owing to its size, diversity and penetration, it benefits from best in class banking and property industry contacts which, along with its wealth of in-house skill and expertise, have enabled it to continue to attract and secure high quality market opportunities. Taking a client-centric approach, the business places the highest priority upon integrity and transparency, leveraging upon the significant resources provided by the wider LGIM platform. Sector specialists cover each sphere of the market and are supported by LGP’s market-leading research capability. LGP’s sector specialisms cross all facets of the real estate market. In particular, the Company has a major development platform, responsible for delivering West End landmark building, Central Saint Giles, and Agar Street, its high profile Covent Garden office scheme, amongst others, and is currently involved in bringing forward a number of significant town-centre retail and leisure regeneration projects, including Bracknell, Trowbridge, Northampton and Eastbourne.
Legal & General Property Limited. Registered address: One Coleman Street, London EC2R 5AA. Registered in England 2091897.
For more information please contact:
PR Manager, Legal & General Capital and Real Assets, LGIM (Property, infrastructure and alternative finance)
t: + 44 (0) 203 124 2777
m: + 44 (0) 7718 395 279
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