Legal & General Property (LGP) received backing from all regions of the globe as it raised £403 mln (€562 mln) equity for its second UK Property Income Fund.
Legal & General Property (LGP) received backing from all regions of the globe as it raised £403 mln (€562 mln) equity for its second UK Property Income Fund.
Announcing the final close for UK PIF II, the UK-based fund manager said it believed the equity total represented the 'largest volume of capital raised by a diversified UK closed-ended property fund in over 12 months'. With gearing added the fund will have total buying power or gross asset value (GAV) of £610 mln.
Subscriptions came from institutions based in Asia, North America, Europe and the Middle East. A total of 16 investors committed to the fund, and for many this was their first overseas real estate investment. Seven investors also participated in the maiden fund, UK PIF I, which raised £300 mln of equity from 14 major international institutional investors.
The gearing structure of both funds allowed investors to choose their preferred level of leverage between 0% and 50% Loan to Value (LTV). Half the investors opted to have no gearing at all, favouring a pure property exposure, whereas the other half choose a modest risk exposure, with levels ranging from 20% to 50%
Charlie Walker, director and fund manager of the UK PIF I and UK PIF II, comments: “The UK Property Income Fund model has continued to prove popular with investors, due to both its innovative answer to accommodating varying investor appetites for leverage as well as the ever popular desire for income producing properties. Our proven track record and reputation for smart deals and clever active management was reflected in Fund II’s sizeable equity close, as well as the international reach of its investor base.
'We will continue to deploy the capital into attractive UK acquisitions, in line with the Fund strategy, and capitalise on the strength of relationships across the occupational and investment markets, which are always key to our success.'
The fund will target opportunities that are expected to allow it to achieve a net IRR of 8-9% for ungeared investors and a net IRR of 12-14% for geared investors. As with UK PIF I, the fund will deliver a core/core-plus risk strategy over a seven year lifespan and includes investment from Legal & General Group and the Fund team.
UK PIF II has already acquired two properties for a total of £213 mln. These are Priory Court and Temple Court in Birmingham and the Overgate Centre in Dundee.