M&G Investments, the leading investment manager, has struck a deal with Scottish Power to fund the construction of the firm’s new headquarters in Glasgow, Scotland.
M&G has acquired the land on India Street and St Vincent Street on a feuhold (freehold) basis, and has worked with Scottish Power, and its development partner, Helical Bar, to provide funding for the scheme. Completion of the office is expected at the end of 2015 and will initiate a 25-year lease to Scottish Power, with annual rent reviews linked to inflation.
The lease will see Scottish Power responsible for all outgoings, maintenance and repairs during the term.
The capital for the development is provided by the £1.53 bln M&G Secured Property Income Fund*. This fund invests in and develops real estate, such as supermarkets, hotels, offices, residential and student accommodation, which is leased to tenants over the long-term, in order to provide M&G’s pension fund investors with returns linked to inflation.
This deal brings the total development finance provided by the Fund to nearly £400m. Most recently, it agreed to provide the funding for the development of 233 residential rental units at Aberfeldy New Village, East London, and the student accommodation at Swansea University’s new campus.
Ben Jones, manager of the M&G Secured Property Income Fund, says: “Funding projects such as this, at a time when traditional development finance is hard to come by, enables firms such as Scottish Power to continue to meet their evolving occupational and operational requirements. For this reason, we have invested and intend to continue investing, in similar infrastructure and other development finance opportunities across the UK which will provide our pension fund clients with high quality, long-term income streams linked to inflation.”
“The fund has now completed over £500 million of acquisitions this year alone and has significant capital to invest into further high quality investment and development funding transactions with rental income linked to inflation.”
The fund was advised by M&G Real Estate and CBRE advised Scottish Power.