Legal & General Property, on behalf of the Property Unit Trust, has acquired the BMI Woodlands Hospital in Darlington from Bluesparkle for circa GBP16.65m, representing a net initial yield of 6.25 per cent.

The freehold property is a 56,747 square foot private hospital building arranged over two floors and set within a landscaped area which includes a 72-space car park. 

Let to BMI Healthcare on a 25-year lease, with 23.5 years unexpired lease term remaining, it provides a passing rent of GBP1.1m per annum with RPI-linked upwards only rent reviews. 

Constructed in 2001, it is located on a mixed-use business park, two miles to the east of central Darlington. Surrounding occupiers include Morrisons, B&Q, McDonalds and a Premier Inn hotel.

The Property Unit Trust’s 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. 

Darlington is the tenth direct property acquisition for the fund since the start of the year. The fund has more than doubled in size from GBP176m to over GBP400m since mid 2009.

Michael Barrie, director balanced property funds, says: “With many of the mainstream sectors having experienced sharp price increases in recent months, the fund’s management team has been looking at alternative sectors, such as car showrooms, hotels and healthcare, in order to gain access to good quality income secured over the long term. 

“Comprising a modern, well-positioned property, let to a strong covenant on a long lease term, the asset provides the fund with an attractive income return which is reviewed frequently and offers it an upcapped hedge against inflation.”