L&G acquires Mitchells and Butlers' Birmingham HQ and hotel for £69.5m from LaSalle Investment Management
Legal & General Property (“LGP”) announces, on behalf of its LPI (Limited Price Inflation) Income Property Fund (the “Fund” / “LPI Fund”), that it has purchased the freehold interest in Mitchells & Butlers HQ offices and associated hotel situated on Fleet Street and Lionel Street in Central Birmingham. The properties have been acquired for a total consideration of £69.5m from LaSalle Investment Management, reflecting a net initial yield of 3.94%.
The high spec, Grade A office building was purpose built for Mitchells & Butlers in 2003 and extends to 95,000 sq ft. The property also benefits from three levels of basement car parking, comprising 278 spaces, together with a 120 bedroom Ibis Styles Hotel which was rebranded and refurbished in 2014.
The building is prominently located within the Birmingham CBD, positioned opposite the new Paradise Circus, one of the UK’s most significant mixed used development schemes, which is destined to significantly enhance the City’s commercial offering and extend its core. It is let in its entirety to Mitchells & Butlers for 35 years from January 2009 with RPI-linked rental increases.
Derek Gilby, Senior Fund Manager at Legal & General Property, comments: “The first major regional city centre office asset for the Fund, we believe that Birmingham is set to benefit from a number of significant infrastructure projects already underway and the asset is well positioned to gain from the regeneration of the adjacent Paradise area which is undergoing a rapid transformation. Mitchells & Butlers offers the fund a strong tenant covenant, providing secure, inflation-proofed income over a long lease term, yet with the benefit of market rental upside.”
Launched in 2010, the LPI Fund offers Defined Benefit pension schemes an innovative way to invest in property with secure, primarily government backed, inflation-linked sources of income. With £675 million of assets under management, the portfolio generates income yields well in excess of those from comparable asset classes such as index-linked gilts or social housing.
JLL acted for LaSalle Investment Management on the deal, while CBRE advised Legal & General Property.
For further information, please contact:
Head of Communications, Real Assets, LGIM
020 3124 2777
Legal & General Property:
Legal & General Property (LGP) forms part of the Real Assets division of Legal & General Investment Management (LGIM), which is responsible for the company’s direct investment capabilities in property and infrastructure. One of Europe’s largest institutional asset managers and a major global investor, LGIM manages £525bn in assets on behalf of over 3,100 clients (31 March 2015), providing products and solutions spanning all asset classes. LGP is the third largest institutional property fund manager in the UK, managing or co-managing 19 funds or vehicles with an aggregate asset value of £16.5bn (31 March 2015). These include:
- Balanced Funds: Life Fund; Linked Pensions; Linked Life; Managed Fund; Legal & General UK Property Fund; UK Property Income Fund I; UK Property Income Fund II; LPI Income Property Fund and the Hybrid Property Fund
- 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.
LGP’s UK-focused asset management platform has built and retained a strong track record of out-performance. Owing to its size, diversity and penetration, it benefits from best-in-class banking and property 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 the significant resources provided by the wider LGIM platform. Protecting the medium to long term value of its portfolio, as a leader in sustainability, green principles are embedded into every property and investment decision.
Sector specialists cover each sphere of the market and are supported by LGP’s market-leading research capability. In particular, the Company has a major development platform, responsible for delivering community-focused projects ranging from West End landmark buildings to significant town-centre retail and leisure regeneration schemes.
Forming part of the Group’s larger UK housing and infrastructure investment strategy, LGP also continues to participate in a growing range of supply side housing activities, including financing affordable homes, the house building sector, urban regeneration, student accommodation and care homes.
About LaSalle Investment Management
LaSalle Investment Management is one of the world’s leading real estate investment managers with approximately $56 billion of assets under management (as of Q4 2014) of private and public real estate property and debt investments. LaSalle’s diverse client base includes public and private pension funds, insurance companies, governments, corporations, endowments and private individuals from across the globe. Managing capital for institutions and private investors all over the world, LaSalle sponsors a complete range of investment vehicles including separate accounts, open- and closed-end funds, public securities and entity-level investments. LaSalle is an independent sub¬sidiary of JLL (NYSE: JLL), one of the world’s largest real estate companies. For more information please visit www.lasalle.com