M&G Real Estate, the real estate arm of UK investment fund manager M&G Investments, has agreed a £350 million sale and leaseback deal with UK leisure chain David Lloyd’s.
The transaction involves the sale and leaseback of 44 health and racquet clubs, 32 of which have already completed, across the UK using capital from the firm’s £3 billion M&G Secured Property Income Fund.
The firm invests in and develops assets across a wide range of real estate sectors, including retail, hotels, offices, student accommodation, healthcare, leisure and residential for the fund.
“Many defined benefit pension schemes are actively seeking cash generating assets in order to pay pensions. Long lease property investments such as this provide attractive cash flows that are inflation protected and contracted over the long term,” commented Ben Jones, manager of the M&G Secured Property Income Fund.
With this portfolio deal M&G has now completed more than £1 billion of deals in alternative property sectors over the past two years, including: a £233 million deal for six hospitals with the healthcare provider the Priory Group, the £173 million sale and leaseback deal on a portfolio of 52 bingo clubs with leisure firm Gala, a £92 million deal with The Bannatyne Group for 39 health clubs on a ground lease basis, and 50 percent of the £240 million deal with British Car Auctions for 18 car auction sites across the UK.
“Deal activity in operational real estate has been particularly prevalent in the past few years, with companies seeking to release value from their real estate assets,” said Kris McPhail, investment director at M&G Real Estate.
CBRE advised M&G Real Estate.