On behalf of Legal & General’s UK Property Fund (the “Fund”), LGIM Real Assets announces that it has exchanged contracts on a Grade A office building in Salford and a Build To Rent (BTR) site in Chelmsford City Centre, as it continues to strengthen and diversify its underlying portfolio.
4 Feb 2020
Since its launch in 2006, the UK Property Fund has grown from £100m to £3bn today, with its success underpinned by a blended and high quality portfolio of assets. This marked the second BTR acquisition for the Fund, the purchase supports its strategy to diversify its holdings into more operational assets, whilst adding to its Alternative exposure. This latest acquisition will sit alongside recent alternative investments in hotels, healthcare, student accommodation and self-storage, including its landmark acquisition of the Iron self-storage portfolio last year.
The BTR site, known as Chelmer Waterside, forms part of a major mixed-use development in Chelmsford, comprising 421 residential apartments, associated landscaping and local retail amenities. The BTR element, which is being developed by Taylor Wimpey in conjunction with Legal & General, comprises 189 studio, one, two and three bedroom apartments, 10 minutes’ walk from the city centre. Legal & General has committed £24.5m to the acquisition and development of the site which is bounded by the River Chelmer and Springfield lock.
Riverside House, which provides 11,692 sq ft Grade A office space and was acquired for £6.3m, represents another strong investment for the Fund. With a net yield of 4.7%, Riverside House occupies a highly prominent location at the entrance to New Bailey, one of Manchester’s most dynamic new office districts – currently being regenerated by English Cities Fund, a partnership between Legal & General, Muse Developments and Homes England. The Manchester office market is performing well, characterised by low supply and strong levels of occupier demand. Forecasts predict these dynamics are due to continue.
Legal & General has a strong track record in the BTR sector and this purchase marks the fifteenth BTR asset across Legal & General’s wider platform.
Legal & General was advised by Savills on this acquisition of the Chelmer Waterside BTR site.
Matt Jarvis, Senior Fund Manager, UK Property Fund, at LGIM Real Assets: "Using our UK property market forecasts, the fund continues to invest in strong performing assets where we see prospects to drive value. The BTR transaction forms part of our strategic focus to increase our exposure to alternative and operational assets, whilst demonstrating the breadth of our wider fund management platform. As we continue to actively diversify our holdings, Build to Rent and Grade A office space remain preferred subsectors alongside operational hotels, self-storage and student accommodation, giving us real time access to occupational markets with a robust rental growth story.
The Fund continues to look to invest in assets in good locations and with strong property fundamentals. Both Chelmsford and Salford are exemplary of this."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
Legal & General Investment Management
LGIM is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.16 trillion1 ($1.47tn, €1.35tn, CHF 1.31tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.
For more than 50 years, we have built our business through understanding what matters most to our clients and transforming this insight into valuable, accessible investment products and solutions. We provide investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property, and cash. Our capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.
1 Data as at 30 June 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong.
Assets under management include securities and derivatives positions
*as at HY 2023