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LGP acquires GBP87m office asset in Birmingham

Legal & General Property (LGP) has exchanged contracts to acquire Priory Court and Temple Court, Old Square, Bull Street, Birmingham for a total consideration of GBP87,500,000. 

Purchased on behalf of its second UK Property Income Fund (UK PIF II), the property was acquired from receivers and the price reflects a net initial yield of 8.28 per cent.
Located in the heart of Birmingham’s Central Business District (CBD), the property comprises two linked, high profile office buildings totalling 230,143 sq ft of office accommodation, a retail parade of nine units totalling 6,194 sq ft and a pub extending to 11,000 sq ft. 
Representing the second acquisition made by UK PIF II, the asset is multi-let to 13 tenants at a total passing rent of GBP7,660,916 per annum.  With an overall average weighted unexpired lease term in excess 11 years, Priory Court is majority-let to the UK Government until 2034, whilst Temple Court is predominately let to PWC until December 2014.
Launched in November 2013, LGP’s UK PIF II has already secured over GBP218m from investors based in the UK, Nordics and Middle East, giving it a total investment capacity or gross asset value (GAV) of GBP372m when including gearing.  With a strong pipeline of investor interest and a further close expected before the end of June, the fund is targeting a GAV of GBP750m, through a series of closings, and is capped at a GAV of GBP1bn.  As with the first fund, UK PIF II’s gearing structure allows investors to choose their preferred level of gearing of between zero per cent and 50 per cent loan to value (LTV). 
Charlie Walker, director of business development and fund manager of the UK PIF I and UK PIF II, says: “As the second acquisition made by UK PIF II, this transaction supports the fund’s focused strategy of seeking well-located, larger lot size assets with strong income dynamics.  These are prominent buildings in Birmingham’s CBD and provide the fund with an ideal combination of a strong and secure income return together with scope to deliver added value through compelling near term active management.”

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