Legal & General raises circa Â£70m for its Leisure Fund.
22 May 2013
Legal & General Property (“LGP”) announces that it has raised an additional £67 million of capital for its Leisure Fund (the “Fund”), its flagship specialist pooled leisure fund, in order to support its investment strategy.
The new equity has been raised at a premium to NAV and further expands the Fund’s investor base to around 30 unit holders. Already one of the highest yielding unlisted funds in the UK, the Leisure Fund offers exceptional income security from a portfolio of high quality tenants. Indeed, approximately half of the income has fixed or inflation-linked increases and, following extensive asset management initiatives, the void rate is currently very low, at circa 3%, and the average unexpired lease term is over 12 years. The Fund also benefits from a low cost of debt which, at 3.5%, enables it to deliver an annual income distribution in excess of 6%.
Over the 12 months to March 2013, the Fund delivered a strong performance of 9.8% to its institutional investors, which compares very favourably to the IPD Specialist Funds index which generated 1.1%. Furthermore, it is the best performing fund in the IPD Pooled Property Funds Index over the past 10 years and with a total average performance of 9.2% per annum this is over 5% per annum ahead of the IPD Specialist Funds index.
Formed in 2002, the Leisure Fund Limited Partnership is held through a Jersey Property Unit Trust (“PUT”) and has over £260 million of assets under management, comprising eight prime leisure assets, occupying dominant positions across the UK.
The Fund recently completed the sale of its Morrisons supermarket in Aldershot for approximately £40 million. The 77,992 sq ft store is let to Morrisons for a further 24 years and forms part of The Westgate leisure scheme, which was forward funded by LGP and completed in October last year. Anchored by a seven-screen multiplex Cineworld, the leisure element of the scheme is retained by the Fund and provides eight family-based restaurant units and a 91-bed Travelodge hotel.
LGP will use the new equity primarily to look for additional forward funding opportunities. With a target gearing of around 25-35%, following the equity raise the Fund could grow its gross assets under management to approximately £400 million.
Andrew Ferguson, Fund Manager of the Leisure Fund, comments:
“With the cinema and restaurant sectors performing well in recent years and demonstrating strong recession proof characteristics, particularly the former which has grown its revenue and footfall year on year during the economic downturn, we continue to believe that there is significant value to be found in the leisure market. Offering good, secure income returns, with long leases off lower base rents, the leisure sector therefore provides an attractive alternative sector for investment.
“This has been reflected in the performance of the Leisure Fund, which has come first out of the IPD Pooled Property Funds Index over the past 10 years and delivered high returns to its investors. Further diversifying and growing the investor base of the Fund, this latest capital raise enables us to continue to seek attractive investment opportunities, particularly high quality, well located development schemes, with major pre-lets in place, and support its successful story of outperformance over the medium term.”
Notes to editors
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 £406bn of assets on behalf of more than 3,300 clients (31 December 2012) 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 £10.6bn as at 31 March 2012.
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 the West End office market’s latest landmark, Central Saint Giles, and currently involved in developing its high profile Covent Garden scheme, Agar Street, as well as significant town-centre retail and leisure regeneration projects, including Bracknell, Trowbridge, Northampton and Eastbourne.
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
About Legal & General
Legal & General Property Limited.
One Coleman Street
London EC2R 5AA.
Registered in England 2091897.