Could commercial mortgage holders follow LGPL into investments?

05 October 2010

Written by Michael Aglony

Commercial mortgage holders may be inspired to invest in more real estate, as one organisation is to plough money into the sector for the first time.

Legal & General Pensions (LGPL) is to dedicate £2 billion to property over the coming years, according to IPE Real Estate.

Annuity products traditionally spread the cash between gilts, corporate bonds and inflation swaps, the news provider noted.

However, commercial property assets will reduce the company's risk, offer better diversification and provide liability matching.

On behalf of LGPL, Legal & General Property (LGP) will acquire real estate with a value over £40 million and lease it out on a minimum 20-year agreement, the information source reported.

Two Tesco Extra stores in Scunthorpe and Glasgow have already been purchased by LGP and are being rented at £2.4 million and £2.32 million respectively.

Commercial mortgage holders seeking investment opportunities may consider acquiring property in Mayfair, as Hines UK is currently leasing office space there at a price of £97.50 per sq ft, according to Property Week.

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