CBRE Global Investors, the world’s largest real estate investment management firm with $87.6 billion of assets under management, has merged two of its UK-focused property funds. The firm announced today that it has merged the Lionbrook fund with the Income Fund and has rebranded the conjoined vehicle as the CBRE UK Property Fund. The merger is the result of negotiations with the funds’ investors that started last year.
The combined new vehicle will hold properties with a gross asset value of £530 million (€643 million; $878 million). The assets are mainly situated in London and the South East of the UK, where property values typically are higher. The portfolio also is overweight in its strategy to industrial property, which CBRE said was in line with its focus on income outperformance.
CBRE listed higher distributions, greater asset diversification, the strategic move towards industrial property and a wider investor base as the reasons why Lionbrook’s investors should welcome the merger. The firm added that investors in the Income Fund should benefit from improved liquidity, asset diversification and greater exposure to prime real estate.
The complexion of the new CBRE UK Property Fund is as follows: 25 percent industrial, 21 percent offices, 38 percent retail (including 21 percent retail warehousing) and 16 percent student accommodation and leisure. The assets are geared at an average of 9.3 percent and offer investors a distribution yield of 5.1 percent.
Michael Ness, UK head at CBRE Global Investors, said: “We have been in negotiations for some time with investors to ensure that both parties felt that this merger was the right thing for them. We are very pleased that they have seen the benefits of a larger fund and that it will be advantageous to both sides.”