Pramerica ground lease fund raises EUR 111m

Pramerica Real Estate Investors has raised an additional £98 mln (EUR 111 mln) of equity for its UK Ground Lease Fund since it received the management mandate in September 2010.

The new funds come as investors are moving out of Index Linked Gilts into alternative investments, which provide the potential for better returns with similar levels of risk.

Once the new subscriptions are fully committed the fund will have about £225 mln from investors, Pramerica said in a statement.

In addition, Pramerica has acquired three assets representing a value of £29 mln (EUR 33 mln), including the ground leases of two landmark Central London buildings on behalf of investors in the fund. The assets comprise the ground lease on Vintners' Place, Upper Thames Street, London for £10.5 mln in an off market transaction. Vintners' Place is a 25,000 m² prime office building in the City of London. The freehold is owned by the Worshipful Company of Vintners.

The company also bought a ground lease on the Great Northern Hotel, King's Cross, London, for £12 mln in an off market transaction. The transaction allows the owner to extract value from the asset itself to invest in the redevelopment of the hotel, and the 999-year ground lease has been structured specifically for the deal, expiring in June 3010.

'These acquisitions are an excellent fit with the criteria of our fund, offering very low risk income with the potential for an attractive yield,' said Charles Crowe, Pramerica's director of UK real estate transactions and strategy.

'They demonstrate our ability to source high quality assets and secure deals on behalf of our investors across all sectors of the property market. As well as providing an attractive, secure investment, ground lease sales also frequently benefit freeholders, as they are able to monetise a sometimes overlooked asset and deploy that cash in their business or the redevelopment of the assets in question.'