L&Gâ€™s Property Unit Trust passes Â£1bn mark as it continues to snap up uk investment opportunities.
06 December 2013
Legal & General Property (“LGP”) announces that its UK Property Unit Trust (“PUT”), one of the fastest growing funds in its sector, has reached over £1 billion, as it continues to outperform its peer group and deliver strong returns.
With net inflows of over £250 million since the beginning of the year, the PUT, which was launched in 2006, has grown from £100 million to over £1 billion since inception. Equating to 35% growth per year on average, it is one of the very few property funds in the sector that continues to see steady inflow of capital from both Retail and Institutional investors. Delivering strong returns, the Fund has outperformed the Lipper Property IMA Sector peers over one, three, and five years, with 2.1% per annum outperformance over the five years to October 2013.
Investing its money in a range of retail, office and industrial market opportunities across the UK, that provide the potential for long-term capital growth, the Fund also invests in alternative sectors such as car showrooms and hotels, whilst retaining liquidity by utilising further investment capabilities such as REITs and derivative trades. So far this year The PUT has secured 23 acquisitions, totalling £183 million, and is in discussions on a number of other potential purchases. Recent acquisitions include:
- Hams Hall 170 and Hams Hall 28, Coleshill, Birmingham. Comprising two industrial distribution warehouse units, the properties were acquired for £16.6 million, representing a net initial yield of 6.9%. Constructed in 2007, the warehouses are located in one of the UK’s premier distribution parks, Hams Hall Distribution Park, which is situated 12 miles from Birmingham and 15 miles from Coventry, and benefits from excellent transport links including its own onsite intermodal rail freight terminal.
- The Premier Portfolio. Purchased for a total consideration of £26.1 million, the Portfolio consists of six assets located in Wales, Midlands and North West, including one industrial and office campus, four distribution units and one retail warehouse park. The deal reflected an overall net initial yield of 10.6%.
- Redcliffe Quay, Bristol. A prominent office development located adjacent to the Waterfront and Bristol Bridge, the property comprises 108,049 sq ft arranged as two separate buildings linked under a public piazza by a common lower ground floor car park and was acquired for £19.7 million.
- Dunfermline, Fife Leisure Park. Acquired for £26 million, reflecting a net initial yield of 6.5%, this scheme comprises a top performing Odeon cinema, a Bowlplex bowling alley, seven restaurants and a flagship Bannatynes gym.
Other acquisitions in 2013 included the Ptarmigan portfolio, the Pendragon portfolio and Alphington Retail Park in Exeter. It has also delivered successful development projects, such as St Stephen’s Place Leisure Park in Trowbridge and Burghmuir Retail Park in Stirling.
Benchmarked against the Lipper Property IMA and IPD Balanced Monthly Index Funds, the Fund’s investment objective is to achieve income and capital growth through diversified investment in UK commercial property, with a focus on property selection and active management within a research-driven risk/return framework for portfolio construction.
In order to achieve this, the Fund is not currently pursuing a sector strategy but is primarily focussing on three main areas: defensive assets that offer very long leases and indexation or fixed growth provisions; high quality development funding opportunities that may be purchased at a discount and benefit from stamp duty savings; and high yielding medium term income streams in core locations which offer added value potential through lease engineering.
At present, circa 30% of the portfolio’s income benefits from fixed or RPI linked leases and there is minimal occupier risk, with the void level maintained at circa 2% over the last five years, demonstrating the quality of the portfolio and asset management capabilities of the team.
Matt Jarvis, Fund Manager of the PUT at Legal & General Property, comments: “It is a significant milestone for us to achieve and we are incredibly pleased with the way the Fund has grown and how it has performed since we launched in 2006. With the market now catching increased interest from retail investors generally we expect the growth of the Fund to continue and for our investment appetite to be sustained into 2014.”
An award winning fund, the PUT was picked as the Winner of the Best Large Property Fund at the Money Observer Fund Awards 2013 for the third time in the last five years – and was highly commended in the Value for Money category for the second year in a row. It was also awarded for its work in the sustainability arena receiving a Green Star in GRESB’s (Global Real Estate Sustainability Benchmark) 2013 independent performance benchmarking report.
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 £443bn in assets on behalf of more than 3,100 clients (30 September 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 £11.6bn as at 30 September 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.
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