L&G and Federated Hermes are merging two long-running investment vehicles to create a £4.7bn UK real estate fund.
The Federated Hermes Property Unit Trust (FHPUT), founded in 1967, will be subsumed by the L&G Managed Property Fund (MPF), which was launched in 1971.
MPF will assume ownership of the enlarged portfolio. Federated Hermes said a “substantial portion” of FHPUT unitholders’ holdings will be transferred to MPF, while the rest are being paid out to leave the fund.
Federates Hermes also said an “overwhelming majority” of FHPUT unitholders voted in favour of the merger.
Mark Russell, CIO of Federated Hermes Real Estate, said: “We are proud to be able to announce today the successful merger of FHPUT with the L&G MPF. It is also with a sense of pride, and some nostalgia, that we bring our 24-year association with FHPUT, a consistent strong performer, to a close. As the market has evolved, the needs of our clients have likewise changed and, we therefore sought this merger to provide the best options possible for them.
“This outcome follows months of detailed and thoughtful planning, undertaken in close consultation with FHPUT’s unitholders. Our goal throughout has been to deliver a solution for our investors that offers continued market exposure to the majority, where feasible, while enhancing both stability and liquidity over the long term.
“We are confident that the L&G MPF – managed by a like-minded and highly experienced team – will continue to serve our clients with the same excellence and integrity they have come to expect. We are grateful to the L&G team for their collaborative and constructive approach throughout this process.”
Michael Barrie, head of real estate for the UK and Europe at L&G, said: “Bringing together two of the UK’s most established property funds in the UK is a significant step in our strategy to strengthen our market position. It reinforces the collaborative approach that underpins L&G’s private market platform growth, our credibility as the partner of choice for consolidation opportunities and our abilities to execute innovative solutions.
“Through combining deep sector expertise with strong partnerships, we will continue to seek resilient, long-term value for investors. The overwhelming support from FHPUT unitholders is a clear vote of confidence – both in our strategy and in our partnership with Federated Hermes.”
Rob Codling, head of commercial funds, real estate equity at L&G, said: “The MPF has been very acquisitive over the last 18 months, and this merger will continue to expand and strengthen our property portfolio. The assets complement existing holdings, and we expect the combined portfolios to drive strong returns for all investors. It has been a pleasure to collaborate with Federated Hermes through this process, to deliver a compelling solution for the FHPUT unitholders who we look forward to welcoming into the MPF.”
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