Lothbury completes £110 mln acquisitions on behalf of UK pension fund (UK)

Lothbury Investment Management (LIM) has completed three off market acquisitions totaling nearly £110 million (approx. €128.46 million) on behalf of a retained client, as part of a segregated mandate for a major UK pension fund.

The three purchases comprise the freehold of the Sainsbury’s supermarket in North Cheam, London and two student accommodation assets in London and Glasgow.

The Sainsbury’s supermarket in London Road, North Cheam was acquired in a deal worth £80 million (approx. €93.43 million) from a private investor. At 110,000 ft² (approx. 10,219 m²) , the freehold property is one of Sainsbury’s larger food stores and comprises principally retail space with in excess of 25 years of a 30 year lease remaining. The store was extended and redeveloped in 2007 and has a decked car park, a Starbucks and Timpsons concession and a petrol station on site. It is the dominant store within its primary catchment.

The London student accommodation is the newly developed Peckham Road Buildings let to the University of the Arts in Camberwell, purchased from Alumno Developments. The 155 bed space accommodation was purchased for £15.5 million (approx. €18.1 million) with a 35 year lease to the University. The 125 bedroom plus common rooms facility is in a prime location and comprises high specification student accommodation in four buildings, three of which are historic Grade II listed and one is a newly constructed wing. This was formerly the offices of the London Borough of Southwark.

The Glasgow property is a forward funding purchase at 235 – 241 Dumbarton Road, with an end value of £13.7m (approx. €16 million), where vendors, Alumno Developments, will develop a purpose built and designed 174 bedroom student accommodation block, with a 4300 ft² (approx. 400 m²) retail unit on the ground floor. The building will be let to Derwent Housing Association, a nationwide housing association that operates a student accommodation arm, on a 21 year lease and will serve, principally, students at the University of Glasgow, which is in close proximity. Construction is underway, with completion in time for the beginning of the 2014/15 academic year.

Leases on all three acquisitions are based on annual uplifts linked to RPI, which is line with LIM’s retained client’s investment strategy.

Mike Toft, director at Lothbury Investment Management, said: “These are three important purchases with attractive lease structures, in prime locations and with excellent residual values.

“Food stores in Greater London are at a very high premium due to lack of land supply and restrictions on planning permission, so competition for property such as this is always keen. Being able to secure the acquisition off market and with such a good covenant and favorable terms is good news for us and a credit to the LIM team and our advisors. This is an asset that we plan to hold within the segregated mandate on behalf of our clients and benefit from the long term inflation linked lease.

“Meanwhile, student accommodation in London is extremely scarce, so demand will always be very high for such properties as the Camberwell acquisition. The quality and location of the buildings also means that there is long term redevelopment potential. Glasgow, meanwhile, has a full time student population of over 50,000 and a limited supply of purpose built accommodation. With this new property, there is, therefore, a superb opportunity to capture the demand

“These purchases represent the largest property acquisitions made by Lothbury Investment Management since our inception and cement our position as a key player in the market for long income properties.”

LIM was advised by Cushman & Wakefield on the Sainsbury’s acquisition and by Lawson & Partners on both student accommodation acquisitions.

Source: Lothbury

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