L&G partners with PGGM to acquire Bishopsgate Unit Trust for £370m
Legal & General Property ("LGP") announces, on behalf of Legal & General Capital ("LGC") and Dutch pension fund manager, PGGM, that it has successfully completed the purchase of the Bishopsgate Long Term Property Fund Unit Trust for around £370 million, following a competitive bidding process. The acquisition reflects a net initial yield of 6.0%.
The portfolio will be held as a Jersey Limited Partnership (the "Partnership"), with PGGM and LGC acting as Limited Partners and LGP acting as the fund manager. The investment plan is to target a strong return through a strategy of optimising property level business plans, while also integrating material environmental, social and governance (ESG) aspects throughout the portfolio, and realising strong ESG performance.
Diversified both geographically and by sector, the Trust holds a good quality portfolio of 24 commercial properties located across the UK and arranged over 1,543,217 sq ft, including two prime London offices located in Covent Garden and Kensington. Benefiting from a strong bias to London and the South, with nearly 60% of assets by value situated within these two regions, the remaining 40% of the portfolio is typically located in major regional cities such as Manchester, Cardiff, Leeds and Glasgow. The assets provide an attractive income, with a passing rent of £21,694,257 and a 2.3% vacancy rate as a percentage of ERV. The portfolio has 159 tenancies and average weighted unexpired lease term is 9.3 years.
A moderate level of gearing will also be introduced to the portfolio which previously held no debt. As such, LGC has also provided a £142 million facility to the Partnership, reflecting a 40% Loan To Value ratio as at September valuation.
Mathieu Elshout, Senior Investment Manager at PGGM commented: “The portfolio comprises well located, high quality UK assets, with significant opportunities to add value and to enhance the income return through asset management initiatives. In order to achieve this, we are very pleased to be partnering with Legal & General, who will be actively managing the portfolio.
“Strongly aligned in our investment goals, as part of this, we share a belief with L&G that ESG factors have a material impact on the financial performance of our real estate portfolios and that it is our responsibility to capture the value and mitigate the risks related to these by planning in advance and leading the way in sourcing cutting edge solutions. We look forward to making similar investments in due course."
Laura Mason, Director of Direct Investments at Legal & General Capital, said: "This investment demonstrates our continued commitment to opportunistically seeking out direct investments that provide our shareholders with strong risk-adjusted returns whilst utilising our broad capabilities and strong customer franchise. We believe that our partnership with PGGM and LGP is backed not only by like-minded investors, but high quality assets and a roadmap to achieving value.”
Michael Barrie, Director of Fund Management at Legal & General Property, added: “We believe that our success in securing this investment came down to the certainty and speed of execution that we could offer the vendor, based on our proven ability to handle complex transactions in a short time period, quality of capital, with an all cash offer, and high standards of confidentiality. LGP specialises in driving value by using its unique sector specialist knowledge and occupier insight to improve the assets it manages making them fit for future looking occupier needs.”
Knight Frank acted for LGP, while CBRE Capital Advisors represented the vendor.
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For further information, please contact:
PR Manager, Legal & General Property
020 3124 2777
Corporate Communication PGGM
Tel: +31 30 2779735 / +31 30 277 1500
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 £465bn in assets on behalf of over 3,100 clients (30 June 2014) 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 17 separate funds or vehicles including three segregated mandates with an aggregate asset value of £14.5bn as at 30 October 2014. These funds 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 fund 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.
PGGM is a cooperative Dutch pension fund service provider. Institutional clients are offered: asset management, pension fund management, policy advice and management support. On December 1, 2014 PGGM has EUR 179,5 billion in assets under management. The PGGM cooperative has approximately 678,000 members and is helping them to realize a valuable future. Either alone or together with strategic partners, PGGM develops innovative future provisions by linking together pension, care, hous