The M&G Secured Property Income Fund, the largest UK long-lease property fund in terms of assets, has made its first disposal since its launch in 2007.
The Sainsbury鈥檚 supermarket in Worcester was sold to the BP Pension Scheme for 拢27.25m (鈧�32.9m) as the 拢1.9bn M&G fund shifts its focus to larger investments, operational assets and development finance.
The Sainsbury鈥檚 property was acquired in 2010 and was one of a number of supermarkets acquired by the fund in its early years.
The lease has 21.7 years left to run with annual RPI increases collared at between zero and 4%. The sale price represented an initial yield of 4.18%.
The fund鈥檚 manager Ben Jones said: 鈥淲e take a robust, long-term, relative-value approach to investment and if best value is achieved by selling a quality asset, we鈥檙e happy to do so, even when we have existing capital to deploy,鈥� he said.
Long-lease funds in the UK have attracted strong capital inflows in recent years from domestic pension funds looking to inflation-linked property to match their liabilities.
This week, Orchard Street Capital revealed it been hired by a large UK pension fund to pursue a long-lease strategy on a separate account basis.
Orchard Street said it had been awarded the 拢150m mandate by a client of Aon Hewitt and would target long-lease, index-linked investments of between 拢10m and 拢30m across the UK.
It said it expects to deploy the capital within the next 12 to 24 months.
Philip Gadsden, managing partner of Orchard Street, said: 鈥淧ension funds are trying to put together baskets of assets that meet or beat their liabilities, and therefore ought to be interested in properties that have inflation-linked rental streams.鈥�
