Wednesday, 17 December 2014
Legal & General Property acquires the Ocean Portfolio and Fradley Park, Litchfield for €286 mln (UK)
The transaction was conducted jointly on behalf of Legal & General’s £1.7 bln (approx. €2.1 bln) UK Property Fund and its £1.2 bln (approx. €1.5 bln) Industrial Property Investment Fund.
The Ocean portfolio comprises 13 properties located throughout the UK with a significant weighting to the Midlands and North East, with nearly three quarters of the total portfolio value derived from the two largest assets; Fradley Park, Litchfield and Follingsby Park, Gateshead. In total, the portfolio has 142 tenants and is arranged over 3,798,871 ft² (352,927 m²) with a further 48 acres (approx. 19.4 hectares) of development land. The portfolio has an average weighted unexpired lease term of 4.9 years.
The assets will be divided between UKPF and IPIF, providing UKPF with access to the four larger distribution warehouse parks, with IPIF acquiring the eight smaller multi-let estates for which it has the existing proven platform to effectively manage. Resulting in a proportional split of 83% / 17%, UKPF has acquired its assets for £188.3 mln (approx. €237.4 mln) whereas IPIF has agreed a purchase of £38.2 mln (approx. €48.1 mln).
One of the fastest growing funds in its sector, launched in 2006 the UKPF has grown from £100 mln (approx. €126 mln) since inception, acquiring £487 mln (approx. €613.7 mln) of assets since the start of the year, as it continues to see steady inflow of capital from both Retail and Institutional investors. Delivering strong returns, it has outperformed the Lipper Property IMA Sector peers over one, three, and five years. Resulting in a more tax efficient structure, it converted into a Property Authorised Investment Fund in May this year.
Launched in 1997, IPIF was one of the first indirect specialist real estate funds and has become a leader in its sector; the largest industrial fund in IPD, it has outperformed its benchmark, the IPD Quarterly Industrial Benchmark, over three, five, 10 and 15 years. One of the more active investors in the UK industrial sector, IPIF has transacted £220 mln (approx. €277 mln) since the start of the year.
Matt Jarvis, Fund Manager of the Legal & General UK Property Fund, says: "Providing a strong alignment to the Fund’s strategic objectives, the impact of the acquisition will include an increase in yield and a higher weighting to good quality product in a sector we expect to outperform in the medium term. The purchases complement the Fund’s current stock and style picking preferences, offering very good locations and modern warehousing, as well as presenting it with numerous and varied asset management initiatives to pursue over the short and medium term.”
Source: Property Funds World