LGP Acquires Overgate in Dundee from Land Securities, as it Secures Â£150m Debt Facility for UK PIF II.
10 March 2014
Legal & General Property (“LGP”) announces that it has exchanged contracts to acquire the Overgate Centre in Dundee from Land Securities for £125.3 million, whilst simultaneously securing a £150 million debt facility with Wells Fargo and Santander on behalf of its second UK Property Income Fund (“UK PIF II” / the “Fund”).
Representing the first acquisition made by UK PIF II, Overgate is the dominant retail centre in Dundee, Scotland’s fourth largest city. The fully enclosed shopping centre totals 420,000 sq ft of retail space, comprising 70 retail units and two multi-storey car parks with more than 1,000 spaces. It is anchored by Debenhams and Primark, and has several other well-known retailers under its roof, including New Look, River Island, TopShop and Superdry.
A replication of the proven model used by the first UK Property Income Fund (UK PIF I), to which Wells Fargo (previously Eurohypo) and Santander are also the debt providers, the seven year facility provides a “hunting licence” and supports the Fund’s innovative gearing structure which allows investors to choose their preferred level of gearing of between 0% and 50% Loan to Value (LTV).
The all-in cost of borrowing is estimated at 4.5% for the duration of the loan, which looks very attractive against the yields on offer via the Fund’s focused strategy of seeking well-located, larger lot size assets with strong income dynamics.The Fund will target opportunities that are expected to allow it to achieve a net IRR of 8-9% for ungeared investors and a net IRR of 12-14% for geared investors.
Signalling the largest first close achieved in 2013 for a UK focused fund, in November LGP announced that its UK PIF II had already secured over £138m (c.€165m) from seven investors based in the UK, Nordics and Middle East, giving it a total investment capacity or Gross Asset Value (GAV) of £224m (c.€267m) when including gearing. With a strong pipeline of investor interest and a second close expected before the end of 2013, the Fund is targeting a GAV of £750m, through a series of closings, and is capped at a GAV of £1bn.
Charlie Walker, Director of Business Development and Fund Manager of the UK PIF I and UK PIF II, comments: “As the first acquisition made by UK PIF II, this investment delivers a strong income profile as a core asset, whilst also providing additional opportunities to drive footfall and alter the tenant mix to enhance the rental tone across the scheme. Furthermore, teaming up with the same strong banking line-up to the first UK Property Income Fund, we have a facility in place that provides a flexible approach to delivering our compelling investment strategy.”
Cushman & Wakefield acted for Land Securities and CBRE advised LGP.
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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About Legal & General
Legal & General Property Limited.
One Coleman Street
London EC2R 5AA.
Registered in England 2091897.