BlackRock Real Estate has bought a portfolio of UK garden centres for £112.5m (€154m).
The eight garden centres were acquired for the UK Long Lease Property Fund, launched by BlackRock two years ago.
The fund, which is designed to match the liabilities of UK pension funds, has now invested more than £420m in assets with an average unexpired lease term of around 30 years.
Geoffrey Shaw, portfolio manager of the BlackRock UK Long Lease Fund, said: “The garden centre market is unique and purchase opportunities come around very rarely.
“The portfolio is well placed to take advantage of future demographic shifts and this high quality set of assets will deliver strong index-linked income streams for the fund’s investors.
This, combined with promising sales growth and investment in development of the centres continuing, makes it an exciting investment opportunity.”
The UK garden centre market is set to grow, with researcher Mintel forecasting a 23.6% increase in consumer spending on garden products from 2014 to 2016.
The core customer base for garden centres is 55 to 74 year olds, a demographic that is predicted to grow by 24% in the next 20 years, according to Mintel.
The portfolio was sold by LaSalle Investment Management. Paul Jaffe, national director at LaSalle, said: “Garden centres are attractive to investors because they offer long index-linked leases, good quality operators and good underlying fundamentals.
“We acquired the portfolio in 2006 for a closed-ended vehicle at a time when investors were looking for stable, income producing asset in an increasingly hot market.
“The portfolio has outperformed for investors and its sale comes during year of high demand for UK commercial property.”
The ‘Ferndown’ portfolio includes assets in Bicester, Cadbury, Endsleigh, Cardiff and Woodford.
Six sites are let to operator Wyevale Garden Centres, with two sites occupied by Notcutts and Squires Garden Centres.