REAL ESTATE - Legal & General’s pooled property pension fund has acquired a £25.6m (€37.3m) office block as part of the firm’s strategy to up its weighting in central London real estate.
The firm acquired the refurbished 1960s building, which is leased until July 2015, from Great Portland Estates. The initial yield on the property will be 4.9%. Annual income from the property is £1.32m.
The £360m fund, which is open only to UK pension funds, has doubled in the past year. Michael Patrick, business development manager at Legal & General, said investor enthusiasm reflected the weight of capital coming into the market and the fund’s performance over the past 12 months.
“Building up the central London office weighting is part of the fund strategy,” he said. “We’re predicting growth in that sector and we want to take advantage of it. Historically, we’ve been relatively underweight but in the past year we’ve taken steps to go overweight.”
In a second acquisition from Great Portland Estates, Scottish Widows Unit Funds purchased a six-story 1970s block in Victoria for £21.4m. The initial yield on the property, which comprises offices, residential and an additional four-story warehouse, is 4.7%.