LGIM Real Assets (Legal & General) has announced on behalf of its UK Property Fund that it has completed the sale of 15 Bonhill Street, London, to Mayfair Capital Partners for £112.5 million, reflecting a net initial yield of 5.12%, as it continues to invest creatively in undervalued sectors where it can leverage its occupier knowledge.
Maximising its performance, the disposal allows the Fund to continue to diversify its holdings and recycle its capital into more operational and alternative assets, such as its investments into BTR, hotels, healthcare, student accommodation and self-storage. Recent examples include the acquisition of the Iron self-storage portfolio, its landmark self-storage deal as well as the Build To Rent (BTR) site, known as Chelmer Waterside, in Chelmsford.
The sale follows the successful conclusion of an intensive asset management programme, through which Legal & General significantly improved the standard of accommodation, level of occupier service and technology used by its tenants.
Following the UK Property Fund’s launch in 2006, the Fund has grown from £100m to over £3bn today as it continues to see steady capital investment from retail investors.
Matt Jarvis, Senior Fund Manager of the UK Property Fund at Legal & General, said: “Having acquired the asset in 2014 for £62.6 million, this sale marks the conclusion of a highly successful asset management programme and supports our Fund strategy to seek undervalued sectors. The Fund has had a strong focus on investing in operational real estate such as hotels, BTR and self-storage where we can benefit from income linked to the underlying operational performance of the property for our occupiers.”
Giles King, Fund Manager at Mayfair Capital Investment Management, says: “The Bonhill Building meets a number of our thematic investing criteria – tech connectivity, transport infrastructure, clustering of tech businesses and wellness. Along with an attractive yield of 5%, we see potential for further growth in the office rents.
“The acquisition case was strengthened by our expectation London will remain a popular destination for talent and occupiers regardless of the Brexit outcome. Much of the global city’s attraction is tied to factors independent of the UK’s EU membership – location, time zone, language, workforce, infrastructure and culture. So far, London has proved very resilient, with strong job creation and new commitments from international corporates – such as Google.”
Colliers acted for Legal & General on this deal and Knight Frank acted for Mayfair Capital Partners.