Legal & General acquires Tesco Supermarket portfolio in £46.6 mln. sale & leaseback (UK)

Legal & General Property ("LGP") announced, on behalf of the Legal & General UK Property Unit Trust ("PUT"), that it has completed the acquisition of a portfolio of three supermarket stores, located in Quinton, Ludlow and Market Deeping, in the Midlands, in an off market sale and leaseback transaction from Tesco Stores Limited. The portfolio was acquired for circa £46.6 million (approx. €53.6 mln.).

Let on completion to Tesco Stores Limited on new 20-year leases, the portfolio produces an initial rent of over £2.4 million and benefits from RPI-linked annual uplifts. The assets, which provide sales areas ranging in size from circa 31,000 ft² (2,870 m²) to 43,000 ft², are situated in well-connected suburban areas near to Birmingham and Peterborough. Quinton is a suburb of Birmingham, located 3.5 miles west of the city centre, whereas Ludlow is an attractive historic market town in Shropshire, West Midlands, and Market Deeping is a market town in Lincolnshire in the East Midlands, nine miles north of Peterborough.

Matt Jarvis, Fund Manager at Legal & General Property, commented: "This purchase is in line with the Fund's acquisitions strategy, which seeks to identify and secure well located assets, and also increase its exposure to RPI-linked leases. The deal also reflects our ongoing belief that there is value in parts of the retail sector, particularly supermarkets, which continue to offer strong underlying rental growth potential."

The purchase follows a number of recent acquisitions completed on behalf of the PUT, including an industrial scheme in Leamington Spa, the purchase of Whitehall One in Leeds and the Tradeteam distribution unit in Hams Hall earlier this year. Launched in 2006, the PUT has outperformed the IPD monthly benchmark over one, three, and five years and delivered top quartile performance over five years. Benchmarked against the Lipper Property IMA and IPD Balanced Monthly Index Funds, its investment objective is to achieve income and capital growth through diversified investment in UK commercial property with a focus on property selection and active management within a research-driven risk/return framework for portfolio construction.

Source: FTI

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