L&G and Dutch fund PGGM buy UK property fund for £370m

Deal gives buyers rights to 24 commercial properties across Britain.

Canary Wharf, London — A file photograph of the Canary Wharf business district in London Reuters

The UK's Legal & General Group and Dutch pension fund manager PGGM have together bought two dozen British properties for about £370m ($562m).

The buildings in the portfolio, known as the Bishopsgate Long Term Property Fund Unit Trust, generate an annual rent of about £22m, according to a 6 January statement from L&G Property and PGGM.

The buyers, however, did not reveal the identity of the seller.

The acquisition gives a net initial yield of 6%, according to L&G.

The trust holds 24 commercial properties located across Britain, including two prime London offices in Covent Garden and Kensington, L&G said, with nearly 60% of its assets by value located in London and south of England.

Mathieu Elshout, a senior investment manager at PGGM, said in the statement: "The portfolio comprises well located, high-quality UK assets, with significant opportunities to add value and to enhance the income return through asset management initiatives."

PGGM manages over $200bn (£132bn, €168bn) in pension assets.

Commercial real estate values rose in 2014 on the back of an improving UK economy.

The capital values of offices, shops and warehouses increased by 11.6% and resulted in a return of 17.8% in the eleven months to November 2014, according to data from realty consultant CBRE.