The £8bn (€10bn) Tesco Pension Scheme has completed the purchase of a shopping centre in the town of Lincoln for £46m.
Located in the heart of Lincoln in the east of England, the Waterside Centre was sold by Capital & Regional and its joint venture partner, Karoo.
The centre was recently redeveloped before being handed over to the Tesco scheme and includes a Tesco supermarket chain.
The pension fund allocates around 10% of its assets to real estate and manages its portfolio of UK assets in-house.
The sale reflected a net 5.88% initial yield.
Capital & Regional, which paid £24.8m for the property in early 2011, said the sale represented a 20% IRR.
The company will use most of the £15.7m in proceeds to repay central borrowings.
In an interview with IPE in September, CIO Steven Daniels said the fund liked retail exposure in its real estate holdings, as they offered long-term lease agreements, highly rated tenants and inflation-linked rental income.
Daniels said the index-linkage allowed the fund to match pension increases and avoid the use of derivative-based hedging instruments.
Tesco last year supported a new office development in Cambridge, investing £32m in construction costs and pre-letting 90% of the project’s office space.