M&G Investments, a leading international investment manager, has sold the Sainsbury’s supermarket store in Worcester to the BP Pension Scheme, for £27.25 mln (approx. €32.92 million), representing a net initial yield of 4.18%. The lease had 21.7 years remaining with annual RPI increases collared at 0-4%.
This is the first sale by the £1.9 billion (approx. €2.3 billion) M&G Secured Property Income Fund, which invests in and develops a wide range of UK real estate, such as supermarkets, hotels, offices, student accommodation and residential. The portfolio has 100 properties that are leased to tenants over the long-term, with a weighted average maturity of over 29 years. The portfolio provides M&G’s pension fund investors with much sought after returns linked to inflation.
This supermarket was first purchased in 2010 and was the 20th property acquired by the fund. The fund was an early investor in the sector and snapped up value in UK supermarkets quickly, building a well-diversified portfolio of assets.
Ben Jones, manager of the M&G Secured Property Income Fund, says: “The beauty of this fund is that it has the flexibility, scale and resources to consistently identify and exploit value across the entire long lease property market. We take a robust long term relative value approach to investment and if best value is achieved by selling a quality asset, we’re happy to do so, even when we have existing capital to deploy. This deal enables us to realise strong total returns from a property that has delivered rising income for the past three years.
“Right now we are finding excellent value in larger opportunities and innovative transactions, particularly in operational assets and development finance, where we continue investing clients’ capital for secure long-term income streams that are linked to inflation.”
M&G has invested over £4 billion in long lease real estate and has further capital to deploy. The fund was advised by M&G Real Estate which was advised by JLL. CBRE advised the BP Pension Scheme