West Yorkshire fund joins M&G and Asian investor in £105m property venture

James Phillips
clock • 2 min read

West Yorkshire Pension Fund (WYPF) has teamed up with M&G Real Estate and an unnamed Asian investor to acquire a £105m building in Manchester.

The tripartite deal, completed 18 July, saw each investor acquire a "meaningful stake" with no majority stakeholder. It also enabled the £11bn WYPF to take advantage of M&G Real Estate's experience in the sector.

The purchase of 101 Embankment, in the city's Cathedral District, led to a net initial yield of over 5.3%, and the building has now been let on a 10-year term to insurance firm Swinton. An accompanying car park has been let to Q-Park for 35 years.

The deal will boost the WYPF's property portfolio; as of 31 March 2016, it had £6.5m of assets invested directly in property.

Its alternatives investment manager Simon Edwards added that this relationship would ensure the WYPF meets its objectives.

"We are very happy to be entering into this long-term partnership," he said. "Thanks to M&G Real Estate's expertise in sourcing and structuring this deal, we stand to benefit from stable returns from a high quality asset and meet the strategic objectives of our fund."

M&G Real Estate head of capital solutions Martin Towns said the demand for real estate investments via this joint approach was increasing.

"We are seeing increasing demand from large investors to want to invest in real estate through separate accounts, but also so-called club deals or joint ventures, such as this one," he said.

"While you've got people who want to access individual assets and transactions, the good quality assets can be quite big lot sizes. This one is £105m, which is quite big for a single investor. Doing it as a joint venture, you can get a bit more control and a targeted strategy, and limit the amount of capital you each have to put into one individual property."

Towns added that the leases include terms for fixed annual rental increases, providing investors with confidence that there is demand for the property from good-quality tenants over a long duration.

James Phillips
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James Phillips

Professional Pensions journalist from 2016-2022

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