LGP completes UKPIF with FIX portfolio acquisition, paving the way for second fund launch.
08 February 2013
Legal & General Property (LGP/the Company) announces, on behalf of its UK Property Income Fund (the Fund/UKPIF), that it has acquired the FIX Portfolio from a consortium of investors represented by Paradigm Real Estate Managers. The trade park portfolio was purchased for a total consideration of £115.9 million, representing a net initial yield of 8.7%, and signals full investment of the Fund.
The FIX portfolio consists of 48 trade parks, with 34 multi-let industrial/trade estates and 14 stand-alone industrial/trade properties. Located across the UK, and comprising a total of 273 units and approximately 1.616 million sq ft, 86% of the floor space is situated in England and Wales, with 14% of it is in Scotland. Major tenants within the portfolio include Travis Perkins, Wolseley, Howdens Joinery, Screwfix and Topps Tiles, generating a total passing rent of over £10 million per annum and providing a weighted unexpired lease term of eight years.
The purchase follows the announcement that LGP secured a £63 million addition to the debt facility of the Fund with Santander, taking the total facility size to £177 million and enabling this final acquisition. Having concluded the UKPIF’s investment programme and as a result of the exceptionally strong appetite amongst investors for this innovative structure, LGP will now look to begin initial discussions on a second UKPIF fund.
Reaching final close at the end of 2011, the Fund secured a total of £300 million of equity from 14 major international institutional investors based in the Middle East, Denmark, UK, France, Finland, Switzerland and Japan. Its innovative gearing structure allows investors to choose their preferred level of gearing of between 0% and 50% Loan to Value (LTV), offering a unique solution to accommodate a range of risk appetites. Furthermore, through careful stock selection of large lot size assets, it aims to capitalise on the economic recovery in the UK based on a core/core-plus risk strategy and provide investors with returns of 15% (geared) and 10% (ungeared).
Following this final purchase, the Fund holds a total of £430 million of assets under management, including 1 City Place in Gatwick, The Meadows Shopping Centre in Chelmsford, Fremlin Walk Shopping Centre in Maidstone, Guildford Business Park and the Co-op distribution centre in Andover.
Charlie Walker, Director of Business Development and Fund Manager of the UK Property Income Fund, comments: “A key attraction of this portfolio is the high income return, as well as the financial strength of the tenants and long leases supporting this cashflow. We believe that the trade park sector is a significant growth area, with continued new entrants and a strong correlation to the drivers behind the UK’s wider economy. In addition to the strong sector and income potential, the portfolio is positioned to deliver growth across a number of asset management opportunities over the next five years.
“Signalling the conclusion of the UKPIF’s acquisition programme and the successful implementation of its investment strategy, this purchase now allows us to work towards the launch of a second fund, which meets the strong appetite demonstrated by investors for this unique gearing structure and core plus strategy.”
Paradigm will be retained in connection with the portfolio. Jones Lang LaSalle acted for the purchaser and Montagu Evans represented the vendor. Tuffin Ferraby Taylor project managed the technical due diligence and sustainability assessments.
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 £391bn of assets on behalf of more than 3,300 clients (30 September 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 £10.4bn as at 30 September 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 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, Milton Keynes, Northampton, Hounslow 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
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Registered in England 2091897.