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L&G’s industrial fund acquires GBP80m of new assets

Legal & General Property’s (LGP) Industrial Property Investment Fund (IPIF) has completed over GBP80 million of purchases, bringing its assets under management to over GBP1 billion. 

IPIF is the largest industrial fund in IPD and LGP is one of the most active investors in the UK industrial market.
 
IPIF’s recent purchases include:
 
- Clifton Moor Industrial Estate, York. One of the largest and most dominant trade parks in the UK, IPIF completed the freehold acquisition of Clifton Moor Industrial Estate from Cornerstone Real Estate Advisers for GBP40,800,000, representing a net initial yield of c.6.0 per cent.  Providing 443,488 sq. ft. of accommodation, arranged over 47 acres, the estate has a low site cover (21 per cent) offering potential to extend units, develop new accommodation and drive rental and capital values. The property is let to 73 tenants by way of 82 leases and holds a weighted average unexpired lease term of 11.1 years.  Strutt & Parker advised Cornerstone Real Estate Advisers and JLL acted for LGP.
 
- Axial Portfolio. Comprising a portfolio of five industrial assets located predominantly in the south east, IPIF acquired the property from Combined Property Control for GBP25,000,000, representing a net initial yield of seven per cent.  Let to 25 tenants in total, of which the top 10 tenants account for 80 per cent of the income, the portfolio provides a weighted average unexpired lease term of 5.21 years and a low void rate of circa 1.6 per cent by ERV. Knight Frank advised LGP.
 
Delivering a total return of 21 per cent to its investors over the 12 months to June 2013, the fund has also undergone a strong period of leasing activity.  With over 120 letting transactions recorded in 2013, producing a combined rental value of over GBP8m and representing the strongest letting year on record, this has brought about a reduction in the portfolio’s void rate from 13.7 per cent to 10.7 per cent.  IPIF currently holds over 20 million sq. ft. of industrial space, let to almost 1,800 tenants across c.150 estates. 
 
Towards the end of last year the fund merged with the Falcon Property Unit Trust, providing it with over 280 units over 36 multi-let estates.
 
Jonathan Holland, fund manager of IPIF at Legal & General Property, says: “With a fund strategy focussed on investing in well located, good quality, multi-let assets primarily situated in greater London or the south east, as well as high yielding industrial properties with stable income returns, this latest flurry of acquisitions provides IPIF with a further base of previously under managed assets through which to drive growth. Taking an opportunity-led approach to investment, much of IPIF’s success lies in its team of 40-strong team of professionals. Combining the resources of JLL and L&G, this team take a proactive, sophisticated stance to managing tenant relationships and continue to enhance rental growth by undertaking targeted refurbishments and increasing lease lengths.”

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