L&G hits £250m for UK fund

Insurer reaches halfway point in its quest to raise ‘innovative’ UK Property Income Fund. Legal & General Property's head, Bill Hughes, says raising equity remains a challenge, yet he is delighted with the success so far.

Legal & General has reached the half way mark in its effort to raise £500 million (€567 million; $818 million) for its UK Property Income Fund, the insurer revealed today.

Having raised £150 million in a first close last ApriL, it has since added £100 million, it said, with investors coming from France, Finland, Switzerland and Japan.

Cushman & Wakefield Corporate Finance is the placement agent.

Bill Hughes, managing director of Legal & General Property, said raising equity remained challenging, but added he was delighted with the fund’s progress.

He said: “We are aware of many funds in the UK and beyond that have failed to achieve a close, and others that have not grown since modest first closes. We are delighted with the progress on capital raising for our fund and plan to bring a number of active conversations to a head in the next few months, prior to a final close in September.” 

The Legal & General UK Property Income Fund is being marketed to investors as a highly innovative proposition in that limited partners can select their individual level of leverage, which the company says has never been done before in the UK.  The amount of leverage can be anywhere between 0 percent and 50 percent.

Investors are being told that target returns are 15 percent geared and 10 percent ungeared.

Updating the market on its progress, L&G said so far there had been an even split between those with gearing and those without. Debt has been provided by German bank, Eurohypo. 

The fund has so far invested £213 million in the market, with acquisitions including Fremlin Walk shopping centre in Maidstone, Guildford Business Park and a distribution centre at Andover pre-let to Co-op.