MGPA marks first investment in UK for fund III

Europe and Asia-focused MGPA is buying a company with more than 2,600 acres of land on behalf of its latest European fund, raised in 2008.

MGPA has made its first UK investment for MGPA Europe Fund III via the acquisition of a company that owns projects that could be sold off to UK housebuilders.

The firm is buying Lands Improvement Holdings for £52.5 million (€58 million; $85 million) from Clerical Medical Investment Group, it said today. Clerical Medical is owned by recently nationalised British bank, Lloyds Banking Group.

MGPA said that the real estate portfolio of Land Improvement Holdings contained more than 2,600 acres of land and that the business specialised in the purchase, promotion and delivery of large-scale sites to house builders throughout the UK . It owns edge-of-town greenfield, brownfield and mixed-use regeneration projects across the UK.

MGPA added it was likely to sell off non-core agricultural assets and commercial estates in order to focus on promoting strategic land for sale to housebuilders to take advantage of the structural supply and demand imbalance of housing in the UK. The £52.5 million represents a 17 percent discount to the 31 December 2008 equivalent valuation of £63.5 million, according to the firm, which will invest in building up the business and buying up more land plots – it could invest an extra £35 million of equity.

MGPA Europe Fund III is part of the larger MGPA Global Fund III, which closed in June 2008 with commitments of $5.2 billion to invest across Europe and Asia. The Fund itself raised $1.3 billion (€841.5 million) and has already made investments in France, Italy, Greece and Poland and currently remains largely un-invested.

Head of UK acquisitions, Simon Marriott, said: “The UK is a key market for MGPA Europe Fund III, with (Land Improvement Holdings) being the first investment in the UK for the fund. We are positive about the long term prospects for the residential land market fundamentally due to the structural supply demand imbalance.”

He added the investment coincides with cyclical lows in land prices. “The specialist platform will create capital appreciation opportunities by promoting sites through the planning process,” he said.