Equity raise oversubscribed as four new multi-manager investors sign up
Legal & General Property’s The Leisure Fund has successfully raised almost £70m of fresh equity at a 2% premium to net asset value.
Dan Batterton, a business development manager at LGP, said four new multi-manager investors had invested in the equity raise, which had been oversubscribed. Aviva Investors, CBRE Global Investors, DTZ and Schroders take the number of unitholders to 30.
“We thought it would be pretty difficult to raise £70m at a premium when units in most funds are trading at a discount,” he said. “But this is the best-performing fund in the UK pooled property fund index, at 9.2%pa over 10 years, and is a really good endorsement.”
The new capital, which can be geared within the fund guidelines of 25-35%, could increase assets under management to at least £400m.
Andrew Ferguson, the fund manager, said: “Over the last six or seven years when times have been difficult, leisure has been incredibly resilientâ€¦ families have not given up that bit of fun. We have a prime portfolio, only 3% voids and solid, long-term income, about half of which is index-linked, with an average lease length of 12 years”.
In the short-term, the equity will be used to reduce debt but Ferguson said the new capital is earmarked primarily for forward-funding prelet developments.
The fund’s last development funding was Westgate in Aldershot. Ferguson said the scheme’s 78,000 sq ft foodstore, let to Morrisons, has been sold to British Steel Pension Fund for about £40m in cash. This is intended for reinvestment in The Light leisure scheme in Leeds, which the fund has contracted to buy from Kames Capital.
Goodman Group has begun a €400m equity raise for its Goodman European Logistics Fund. Last month, the fund issued a €500m corporate bond to pay down bank debt.