BlackRock raises €290m for UK Long Lease fund

BlackRock has raised £250 mln (€290 mln) of equity from six pension funds for its UK Long Lease Property Fund, a new vehicle created to offer institutional investors exposure to inflation-linked income streams.

The UK Long Lease Property Fund will invest in alternative property assets in the UK, such as student accommodation, ground leases, primary healthcare and housing associations, as well as more traditional commercial long-lease assets such as supermarkets and offices.

The vehicle has already invested more than £100 mln of the seed portfolio in property assets with an average lease term of over 20 years, Blackrock said.

Open to institutional investors only, the fund targets a 5% distribution yield with income distributions made on a monthly basis, making it attractive to pension funds and other institutional investors seeking help to match their liabilities with inflation-linked income.

BlackRock has 10 years’ experience in investing in alternative property assets in its core UK property strategy - the BlackRock UK Property Fund.

Marcus Sperber, head of Real Estate for BlackRock in Europe, the Middle East and Africa, said,'Both traditional and non-traditional real estate can provide pension schemes with alternative sources of long-dated income, but we see alternative property assets coming more into vogue. We have instantly put money to work with this new strategy and are looking for other assets to acquire to build the portfolio further.'

The move to offer institutional investors further access to alternative property markets follows the news in May that the firm has entered into a definitive agreement to acquire MGPA, the independently-managed private equity real estate investment advisory company in Asia-Pacific and Europe.

The planned acquisition will make BlackRock a global real estate investment manager, with pro forma assets under management of $25 bn.