Legal & General sells £1bn of UK real estate to foreign investors

Legal & General’s principal balance sheet businesses have sold more than £1bn (€1.12bn) of UK real estate during the first nine months of the year, the UK insurance group said.

Real estate disposals by Legal & General Capital (LGC) and Legal & General Retirement (LGR) rose to £1.1bn, £1bn of which went to international investors.

The sales have generated gross proceeds of £526bm for LGC and LGR combined.

Notable deals during the period were LGR’s recent sale of 70 Gracechurch Street which delivered gross proceeds of £272m.

LGC generated gross proceeds of £254m from £817m of transactions, the company said, adding that all full asset disposals during the period met or exceeded target returns.

The biggest transaction was the sale of LGC’s stake in Arlington Business Parks Partnership to TPG Real Estate.

L&G said proceeds are being reinvested alongside other L&G funds into the group’s substantial UK regeneration programme.

The group continues to invest in the regeneration of cities and towns in the UK. Last week, it revealed it had invested £600m in Leeds.

Nigel Wilson, Legal & General CEO, said: “Having invested £12bn to date, we are on track to invest £15bn of long-term capital in UK housing, urban regeneration, clean energy and business growth.”

Wilson said the “strong demand from international buyers” for its real estate assets “demonstrates that the UK is a great place to invest”.

Real estate consultancy Cushman & Wakefield revealed today that investment in central London real estate reached  £4.82bn in during the third quarter of 2017, as Asia-Pacific buyers snapped up prime City assets. There was a 55% increase in Central London commercial property investment during the period from the same period last year.

Cushman & Wakefield said 74% of £3.25bn investment in the City of London came from Asia Pacific investors, including record purchase of 20 Fenchurch Street for £1.29bn

For the first nine months of 2017, total investment in London was £13.7bn, Cushman & Wakefield said.

Martin Lay, joint head of London capital markets at Cushman & Wakefield, said: “The weight of money from Asia-Pac shows no signs of abating, and the high levels of liquidity in the market are reflected in the average lot size in the City increasing to £116m in the third quarter.

“With over £6bn of available stock currently on the market in the City, we expect further strong investor activity in the final quarter of the year, leading to total investment volumes in 2017 significantly outstripping last year.”

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