Legal & General : L&G's PAIF acquires two further office assets for £60m

20 November 2014

Legal & General Property (LGP) announces, on behalf of its Legal & General UK Property Fund, that it has successfully acquired 55 Strand in London and 5 Vanwall Business Park in Maidenhead from Aviva for a total consideration of just over £60.6 million.

Legal & General's £1.7 billion UK Property Fund converted into a Property Authorised Investment Fund (PAIF) structure in May this year, resulting in more tax-efficient income for many investors. One of the fastest growing funds in its sector, launched in 2006 the Fund has grown from £100 million since inception and by over 55% in the last 12 months alone as it continues to see steady inflow of capital from both Retail and Institutional investors. Delivering strong returns, the Fund has outperformed the Lipper Property IMA Sector peers over one, three, and five years.

55 Strand

LGP has acquired 55 Strand, London WC2 for £37.4 million, representing a yield of 4.34% in June 2015 following the expiry of a rent free period. The building is a freehold office and retail asset located in an established core location on the South side of Strand. Recently refurbished, the 24,802 sq ft of high quality multi let office accommodation is arranged over the eight upper floors and let off reversionary rents averaging £57 per sq ft, with a weighted average unexpired term of nine years to expiry. There is also a 5,742 sq ft retail unit let to Halifax on the ground and lower ground and there is 1,257 sq ft of basement storage.

5 Vanwall Business Park

LGP has purchased the freehold interest in 5 Vanwall Business Park in Maidenhead for a total consideration of £23.26 million, reflecting a net initial yield of 6.45%. Arranged as a single 53,821 sq ft Grade A office building and a decked car park, the property extends over 2.3 acres. It is let in its entirety to SAP (UK) Ltd, a world leader in enterprise software and software-related services, on a lease expiring in March 2021.
The two deals follow on from the purchase of 19/31 Piccadilly Gardens in Manchester last month for the total consideration of £23,100,000, reflecting a net initial yield of 4.84%.

Matt Jarvis, Fund Manager of the Legal & General UK Property Fund, comments: "Offering a number of longer term asset management opportunities, these two acquisitions reflect the Fund's strategy to purchase schemes with the right property fundamentals that provide immediate and secure income from a diverse mix of tenants whilst also providing rental driven growth in the medium term. Our strong inflows into the fund have allowed us to continually modify our strategy in order to opportunistically capture the right assets at the right time and we remain very active in the market with an exciting pipeline of deals under offer."

Colliers advised LGP on the purchase of 5 Vanwall Park, with Aviva being represented by Knight Frank. Fineman Ross advised Aviva on the sale of 55 Strand and CBRE advised LGP.

Legal & General Property
Legal & General Property (LGP) is a wholly-owned subsidiary of Legal & General Investment Management (LGIM), one of Europe's largest institutional asset managers and a major global investor. LGIM manages approximately £465bn in assets on behalf of over 3,100 clients (30 June 2014) and provides products and solutions spanning all asset classes. LGP is the fourth largest institutional property fund manager in the UK, managing or co-managing 17 separate funds or vehicles including three segregated mandates with an aggregate asset value of £14.5bn as at 30 September 2014. These funds include:

Balanced Funds
Life Fund; Linked Pensions; Linked Life; Managed Fund; Legal & General UK Property Fund; UK Property Income Fund I; UK Property Income Fund II; LPI Income Property Fund and the Hybrid Property Fund

Specialist Pooled Funds
The Leisure Fund Limited Partnership; Industrial Property Investment Fund; Arlington Business Parks Partnership; and the English Cities Fund

Single Asset Vehicles
Bracknell Regeneration Partnership; Central Saint Giles Partnership

LGP's UK-focused fund management platform has built and retained a strong track record of out-performance. Owing to its size, diversity and penetration, it benefits from best-in-class banking and property contacts which, along with its wealth of in-house skill and expertise, have enabled it to continue to attract and secure high quality market opportunities.

Taking a client-centric approach, the business places the highest priority upon integrity and transparency, leveraging the significant resources provided by the wider LGIM platform. Protecting the medium to long term value of its portfolio, as a leader in sustainability, green principles are embedded into every property and investment decision.

Sector specialists cover each sphere of the market and are supported by LGP's market-leading research capability. In particular, the Company has a major development platform, responsible for delivering community-focused projects ranging from West End landmark buildings to significant town-centre retail and leisure regeneration schemes.

Forming part of the Group's larger UK housing and infrastructure investment strategy, LGP also continues to participate in a growing range of supply side housing activities, including financing affordable homes, the house building sector, urban regeneration, student accommodation and care homes.

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