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LGP secures additional debt facility to complete UKPIF’s investment programme

Legal & General Property (LGP) has secured a GBP63m addition to the debt facility of its UK Property Income Fund (UKPIF) with Santander, taking the total facility size to GBP77m.

Santander, which is a new lending partner to LGP, has joined a “hunting license” facility with Eurohypo, which expires in 2017. 

The all-in cost of borrowing is estimated at four per cent for the duration of the loan. The new loan provides capacity to continue to seek market opportunities to finalise the investment programme for the fund, thereby completing the UKPIF’s investment objectives.

Reaching final close at the end of 2011, having secured a total of GBP300m of equity from 14 major international institutional investors based in the Middle East, Denmark, UK, France, Finland, Switzerland and Japan, the UKPIF has a total investment capacity of circa GBP475m. 

The fund allows investors to choose their preferred level of gearing of between zero per cent and 50 per cent loan to value. The fund aims to provide investors with returns of 15 per cent (geared) and 10 per cent (ungeared) through careful stock selection of large lot size assets, capitalising on the economic recovery in the UK based on a core/core-plus risk strategy.

Since inception in March 2010, the fund has significantly outperformed its peer group, the IPD Quarterly Universe, by 7.7 per cent.  To date it has acquired assets totalling circa GBP313m.  All located in the South East of England, these include:

◦ 1 City Place in Gatwick and St George’s House in Croydon 
◦ The Meadows Shopping Centre in Chelmsford 
◦ Fremlin Walk Shopping Centre in Maidstone 
◦ Guildford Business Park in Guildford 
◦ Co-op distribution centre in Andover. 

Charlie Walker, director of business development and fund manager of the UK Property Income Fund, says: “Our first deal with Santander, this facility demonstrates not only their flexible approach to lending, but also LGP’s access to debt at an interesting time within the debt markets.  Whereas most lending appetite is currently focused on simple, large, longer let assets within central London Santander has shown that it is prepared to lend on assets across the country, where the fundamentals are right.”

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