The trade park portfolio was purchased for a total consideration of £115.9 million, representing a net initial yield of 8.7%, and signals full investment of the Fund.
Go deeper with GlobalData
The FIX portfolio consists of 48 trade parks, with 34 multi-let industrial/trade estates and 14 stand-alone industrial/trade properties. Located across the UK, and comprising a total of 273 units and approximately 1.616 million sq ft, 86% of the floor space is situated in England and Wales, with 14% of it is in Scotland. Major tenants within the portfolio include Travis Perkins, Wolseley, Howdens Joinery, Screwfix and Topps Tiles, generating a total passing rent of over £10 million per annum and providing a weighted unexpired lease term of eight years.
The purchase follows the announcement that LGP secured a £63 million addition to the debt facility of the Fund with Santander, taking the total facility size to £177 million and enabling this final acquisition. Having concluded the UKPIF’s investment programme and as a result of the exceptionally strong appetite amongst investors for this innovative structure, LGP will now look to begin initial discussions on a second UKPIF fund.
Reaching final close at the end of 2011, the Fund secured a total of £300 million of equity from 14 major international institutional investors based in the Middle East, Denmark, UK, France, Finland, Switzerland and Japan. Its innovative gearing structure allows investors to choose their preferred level of gearing of between 0% and 50% Loan to Value (LTV), offering a unique solution to accommodate a range of risk appetites. Furthermore, through careful stock selection of large lot size assets, it aims to capitalise on the economic recovery in the UK based on a core/core-plus risk strategy and provide investors with returns of 15% (geared) and 10% (ungeared).
Following this final purchase, the Fund holds a total of £430 million of assets under management, including 1 City Place in Gatwick, The Meadows Shopping Centre in Chelmsford, Fremlin Walk Shopping Centre in Maidstone, Guildford Business Park and the Co-op distribution centre in Andover.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataCharlie Walker, Director of Business Development and Fund Manager of the UK Property Income Fund, comments: "A key attraction of this portfolio is the high income return, as well as the financial strength of the tenants and long leases supporting this cashflow. We believe that the trade park sector is a significant growth area, with continued new entrants and a strong correlation to the drivers behind the UK’s wider economy. In addition to the strong sector and income potential, the portfolio is positioned to deliver growth across a number of asset management opportunities over the next five years.
"Signalling the conclusion of the UKPIF’s acquisition programme and the successful implementation of its investment strategy, this purchase now allows us to work towards the launch of a second fund, which meets the strong appetite demonstrated by investors for this unique gearing structure and core plus strategy."
Paradigm will be retained in connection with the portfolio. Jones Lang LaSalle acted for the purchaser and Montagu Evans represented the vendor. Tuffin Ferraby Taylor project managed the technical due diligence and sustainability assessments.
