L&G snaps up €286m UK industrial portfolio at 6.5% yield

Legal & General Property (LGP) has acquired the Ocean industrial portfolio - including Fradley Park - in the UK cathedral city of Lichfield for £226 mln (€286 mln), representing a net initial yield of 6.50%.

The transaction was conducted on behalf of Legal & General’s £1.7 bn UK Property Fund (UKPF) and its £1.2 bn Industrial Property Investment Fund (IPIF).

The Ocean portfolio comprises 13 properties located throughout the UK with a significant weighting to the Midlands and North East, with nearly three-quarters of the total portfolio value derived from the two largest assets: Fradley Park in Lichfield and Follingsby Park in Gateshead.

In total, the portfolio has 142 tenants and is arranged over 3,798,871 sq ft (353,000 m2) with a further 48 acres of development land. The portfolio has an average weighted unexpired lease term of 4.9 years.

The assets will be divided between UKPF and IPIF, providing UKPF with access to the four larger distribution warehouse parks, with IPIF acquiring the eight smaller multi-let estates for which it already has a platform. Resulting in a proportional split of 83%/17%, UKPF has acquired its assets for £188 mln whereas IPIF has agreed a purchase sum of £38 mln.

Launched in 2006, UKPF has grown from £100 mln since inception, acquiring £487 mln of assets since the start of the year.

Launched in 1997, IPIF was one of the first indirect specialist real estate funds and has become the largest industrial fund in the IPD index.

'Providing a strong alignment to the fund’s strategic objectives, the impact of the acquisition will include an increase in yield and a higher weighting to good quality product in a sector we expect to outperform in the medium term,' said Matt Jarvis, fund manager of the Legal & General UK Property Fund.

JLL advised Legal & General and DTZ acted for the vendor.