The joint venture between Legal & General Capital (L&G) and Dutch eco-pension fund manager PGGM has made its first partnership investment with the purchase of a central London property for £67m.
With a launch war chest of £375m, the London Office partnership has been established “to source attractive central London office investments which provide superior growth prospects, as well as significant asset management opportunities”.
Its first acquisition is 72 Broadwick Street, a 65,316 sq ft mixed-use block situated on a landmark island site in the heart of Soho. Fronting on to Carnaby Street, the fabled 1960s fashion parade, it is less than 150-metres from Regent Street and Mayfair. The new owners also feel it will benefit from the opening of a nearby Crossrail station in 2018.
The six-storey building — divided into 54,097sq ft of office space and 11,219 sq ft of residential accommodation — is currently fully let to the National Magazine Company on a 15 year lease that expires in September, 2018.
Laura Mason, a director of investments at Legal & General Capital, said the venture was “an excellent example of what can be achieved by partnering with a forward-thinking international capital company” and expected more similar deals in the future.
“The UK is a great place to invest, pension funds and sovereign wealth funds want to invest here in infrastructure, direct investments and property. Joint ventures are an excellent way of achieving this, as they offer co-investment with a trusted partner with specialist local expertise and knowledge,” she added.
The Soho purchase is the two companies second venture in as many weeks. Earlier this month L&G and PGGM joined forces to acquire the Bishopsgate Long Term Property Fund Unit Trust for around £370m. Owned by a separate joint venture, the trust holds a prestige portfolio of 24 commercial properties, totalling 1,543,217 sq ft, spread across Britain.
“Representing our second strategic partnership with Legal & General, the London Office joint venture yet again allows us to take advantage of the opportunities that exist in the UK for those with the right approach to investment and skills to proactively enhance its portfolio,” commented Mathieu Elshout, senior investment manager at PGGM.
“As a responsible investor we believe that we have an obligation to contribute to a sustainable world,” he continued. “We can do so via impact investment, or investing in solutions, as we call it.”
Elshout said his fund — which has more than £106bn under management for around 2.6m clients — was committed to implementing the so-called ESG factors within its business. The factors are a subset of non-financial performance indicators which include sustainable, ethical and corporate governance issues such as managing the company’s carbon footprint and ensuring its eco-accountability.
“We strongly believe that ESG factors have a material impact on the financial performance of our real estate portfolios and that this will continue to grow over time,” he said.
“Sustainability is an issue that transcends national boundaries and requires an international approach. Looking to seek out assets where improvements could be made, we believe that together with L&G we are strongly placed to realise the value that is available for those that lead the way in pioneering ESG advances.”