BlackRock is under offer to buy LaSalle Investment Management’s Garden Centre Fund in one of the largest deals of its type in the UK.
The $4.7tn (£3tn) investment manager has agreed terms to buy the eight assets in the closed-ended vehicle, which was launched in 2006.
LaSalle put the assets up for sale via JLL earlier this year seeking bids in excess of £110m – a circa 5.5% yield.
The sale attracted interest from UK institutions, including Aberdeen Asset Management, and propcos such as LondonMetric, which pushed bidding to above the asking price.
The centres are predominantly in the south of England and all are long-let for terms of in excess of 25 years with index- linked leases.
The deal is the latest sign of institutional appetite for alternative sectors that offer long income streams which can be matched to annuities.
LaSalle launched the fund at the peak of the last cycle as it sought to find a diverse niche into which to invest in a hot market and the sale is understood to crystallise a significant return for its investors.
The UK’s largest garden centre group, Wyevale, leases six of the centres, while Notcutts and Squire’s Garden Centres occupy one each.
The portfolio spans more than 490,000 sq ft, with the largest individual assets the Cadbury Garden Centre in Bristol and the Bicester Avenue garden centre in Oxfordshire, both of which are let to Wyevale.
Strutt & Parker head of out-of-town retail Andrew Hulme said pricing unusual portfolios such as garden centres proved challenging due to the scarcity of such deals.
However, he said investors were attracted by assets such as garden centres or service stations where the tenant on the headlease did not necessarily account for the majority of the income.
Garden centre groups like Wyevale have sought to grow in recent years by boosting income from concessions such as cafes, which often account for more than 50% of the rent roll in individual centres.
Wyevale is owned by private equity group Terra Firma and the group still owns around 70% of its 140-strong portfolio freehold.
Sources said the level of interest attracted by the LaSalle sale could prompt the group to consider further sale and leasebacks.
Terra Firma was reportedly considering a £700m sale or listing of the business last year, having bought the company for £276m in 2012.
The Ferndown Portfolio
- Bicester Avenue
- Woodford Park Garden Centre
- Wyevale, Endsleigh, Devon
- Wyevale Cadbury, Bristol
- Wyevale Cardiff
- Wyevale Stevenage
- Wyevale Winbourne
- The Kiln Garden Centre Stanmore
