L&G's Industrial Fund Acquires Â£80m of New Assets as it Grows to Over Â£1BN.
25 June 2014
Legal & General Property (“LGP”) announces that its Industrial Property Investment Fund (“IPIF” / the “Fund”) has completed on over £80 million of purchases, bringing its assets under management to over £1 billion. As a result, not only is IPIF the largest industrial fund in IPD, but LGP is also one of the most active investors in the UK industrial market.
IPIF’s recent purchases include:
- Clifton Moor Industrial Estate, York. One of the largest and most dominant trade parks in the UK – IPIF completed the freehold acquisition of Clifton Moor Industrial Estate from Cornerstone Real Estate Advisers for £40,800,000, representing a net initial yield of c.6.0%. Providing 443,488 sq. ft. of accommodation, arranged over 47 acres, the estate has a low site cover (21%) offering significant potential to extend units, develop new accommodation and drive rental and capital values. With a robust retention rate (90%), the property is let to 73 tenants by way of 82 leases and holds a weighted average unexpired lease term of 11.1 years. Strutt & Parker advised Cornerstone Real Estate Advisers and JLL acted for LGP.
- Axial Portfolio. Comprising a portfolio of five industrial assets located predominantly in the south east, IPIF acquired the property from Combined Property Control for £25,000,000, representing a net initial yield of 7%. Let to 25 tenants in total, of which the top 10 tenants account for 80% of the income, the portfolio provides a weighted average unexpired lease term of 5.21 years and a low void rate of circa 1.6% by ERV. Let off low rents, it also offers a number of attractive asset management opportunities. Knight Frank advised LGP.
Delivering a total return of 21% to its investors over the 12 months to June 2013, the Fund has also undergone a strong period of leasing activity. With over 120 letting transactions recorded in 2013, producing a combined rental value of over £8m and representing the strongest letting year on record, this has brought about a reduction in the portfolio’s void rate from 13.7% to 10.7%. IPIF currently holds over 20m sq. ft. of industrial space, let to almost 1,800 tenants across c.150 estates.
Launched in 1997, IPIF was one of the first indirect specialist real estate funds and has become a leader in its sector, having outperformed its benchmark, the IPD Quarterly Industrial Benchmark, over three, five, 10 and 15 years. The lowly geared fund is one of the most liquid closed-ended funds in Europe, benefiting from a strong secondary market with approximately 5% of its units traded each quarter.
Towards the end of last year the Fund successfully merged with the Falcon Property Unit Trust, providing it with over 280 units over 36 multi-let estates which it felt would significantly benefit from the scale, resources and efficiencies of IPIF’s management intensive structure, whilst increasing IPIF’s already large added value pipeline at an opportune point in the market cycle. The merger followed shortly behind the news that IPIF had extended its life to 2020, whilst also adding redemption provisions and introducing a number of initiatives enabling it to be more flexible in terms of raising further equity and responding to market conditions.
Jonathan Holland, Fund Manager of IPIF at Legal & General Property, said: “With a fund strategy focussed on investing in well located, good quality, multi-let assets primarily situated in greater London or the south east, as well as high yielding industrial properties with stable income returns, this latest flurry of acquisitions provides IPIF with a further base of previously under managed assets through which to drive growth. Taking an opportunity-led approach to investment, much of IPIF’s success lies in its team of 40-strong team of professionals. Combining the resources of JLL and L&G, this team take a proactive, sophisticated stance to managing tenant relationships and continue to enhance rental growth by undertaking targeted refurbishments and increasing lease lengths.”
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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For more information please contact:
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