One of two industrial developments forward funded in 2010 by LGP on behalf of its Managed Fund. Works are progressing well at the Fund’s second forward funding project at G. Park Crick, at Junction 18 of the M1 Motorway, where the development is on budget and on target to reach completion in December 2010.
Located 13 miles north of Central London, the Enfield property comprises an 84,620 sq ft warehouse/office unit with parking over a five acre site.
Starting in February this year, the property was developed by Graftongate and has achieved a BREEAM ‘very good’ rating, further enhancing the environmental credentials of properties held by the Fund. John Lewis Partnership has agreed a 20-year lease, which will further underpin the income profile of the Fund.
At G. Park Crick, works are progressing well on a state-of-the-art 260,000 sq ft warehouse, funded by LGP and developed by Gazeley. Located in one of the most sought-after distribution parks in the Midlands, the warehouse has been pre-let to Butchers Pet Care Ltd for a term of 20 years.
The Managed Fund is LGP’s flagship property fund for UK pension funds. Having been established in 1971, it invests on behalf of over 300 occupational pension funds.
The Fund has recently been building on the increased allocation from pension funds for real estate through new purchases of c. £300m in the year to date 2010. The Fund has delivered top quartile returns over rolling one and five year periods against the benchmark.
Mark Russell, Fund Manager at Legal & General Property, said:
“In a period when income is anticipated to be the dominant driver of total returns, the already secure nature of the Fund’s rental stream will be further enhanced by these deals.
"The excellent quality of the stock is crucial in maintaining occupier demand, when tenants will be increasingly examining operational efficiencies, and the strong sustainability credentials of the assets offer a degree of ‘future-proofing.”
Charlie Walker, Senior Fund Manager at Legal & General Property, added:
“These two transactions leveraged a market starved of finance and institutional funding for pre-let developments. The funding margin of 75-100bps, earlier in the year when these deals were struck, has certainly eroded since, which further underpins the quality of these transactions.”
