M&G Investments has agreed to acquire 44 health and racquet clubs in the UK from David Lloyd Leisure for £350 mln (€472 mln).
M&G Investments has agreed to acquire 44 health and racquet clubs in the UK from David Lloyd Leisure for £350 mln (€472 mln).
The majority of the investment capital comes from the £3 bn M&G Secured Property Income Fund, which invests in and develops assets across a wide range of real estate sectors in the UK. The focus is on assets leased to tenants over the long-term to provide M&G’s pension fund investors with returns linked to inflation.
The portfolio comprises 25 freehold and 19 long leasehold properties, and 32 sites have already completed. All the sites are leased back to David Lloyd Leisure for 125 years on a full repairing and insuring basis with contracted annual reviews linked to inflation.
Ben Jones, manager of the M&G Secured Property Income Fund, said: '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. This has led to over £750 mln of further capital being committed to the fund in 2015 from both new and existing clients.'
The M&G Secured Property Income Fund is advised by M&G Real Estate which sourced the transaction.
M&G has completed over £1 bn of deals in alternative property sectors over the past two years, including the £233 mln acquisition of six hospitals from the Priory Group, a provider of specialist healthcare, and a £173 mln sale-and lease-back deal relating to 52 bingo clubs.
CBRE advised M&G Real Estate.