LGP closes second UK Property Income Fund
Legal & General Property (“LGP”) announces the final close of its second UK Property Income Fund (“UK PIF II” / the “Fund”).
Believed to represent the largest volume of capital raised by a diversified UK closed-ended property fund in over 12 months, the Fund secured over £403 million in equity, giving it a total buying power or Gross Asset Value (GAV) of £610 million when including gearing.
Subscriptions came from institutions based across all corners of the globe – including Asia, North America, Europe and the Middle East – with a total of 16 investors committing equity to the Fund; for many investors, the Fund was their first overseas real estate investment. Reflecting the proven track record of its maiden fund, UK PIF I, seven of the 16 investors are replicated across both vehicles. Reaching final close at the end of 2011, UKPIF I secured a total of £300 million of equity from 14 major international institutional investors.
Drawing on the unique gearing structure of the Fund, as put in place by UK PIF I, investors took advantage of the ability to choose their preferred level of leverage between 0% and 50% Loan to Value (LTV). As such, the final split shows that half the investors opted to have no gearing at all, favouring a pure property exposure, whereas the other half choose a modest risk exposure, with levels ranging from 20% to 50%
Charlie Walker, Director and Fund Manager of the UK PIF I and UK PIF II, comments: “The UK Property Income Fund model has continued to prove popular with investors, due to both its innovative answer to accommodating varying investor appetites for leverage as well as the ever popular desire for income producing properties. Our proven track record and reputation for smart deals and clever active management was reflected in Fund II’s sizeable equity close, as well as the international reach of its investor base.
“We will continue to deploy the capital into attractive UK acquisitions, in line with the Fund strategy, and capitalise on the strength of relationships across the occupational and investment markets, which are always key to our success.”
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. As with UK PIF I, the Fund will deliver a core/core-plus risk strategy over a seven year lifespan and includes investment from Legal & General Group and the Fund team.
To date, the fund has acquired two properties totalling circa £213million:
- Priory Court and Temple Court in Birmingham
- The Overgate Centre in Dundee
NOTES TO EDITORS
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 £465bn in assets on behalf of over 3,100 clients (30 June 2014), 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 £15.5bn (31 Dec 2014). These include:
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.
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
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