Nationwide Pension Fund Moves Into Ground Rent Sector
- Fund acquires Asda Superstore investment in Farnworth for a 2.7% yield.
Nationwide Pension Fund Trustees Limited (“Nationwide”), advised by CBRE Capital Advisors, has acquired a highly reversionary ground rent investment for £9.7 million from a JV that included Bolton Council. The 73,000 sq ft building’s headlease includes ground rental income contracted directly from Asda, with five yearly, RPI-linked rent reviews. It was estimated that this rent equated to circa 20% of the open market rental value, offering significant income security.
This was Nationwide’s first acquisition into a planned £100 million portfolio, since they appointed CBRE as investment advisors.
Our role is to acquire a portfolio of ground rent styled investments over time. They need to be well secured with good vacant possession value cover, have a minimum lease length of 40 years and if possible benefit from explicit RPI linkage. We knew that the Asda in Farnworth matched the Fund’s criteria perfectly and, during a competitive pre-auction period where we did all our due diligence up front, were able to secure the transaction by offering and exchanging on the same day.
We continue to look for similar opportunities, across the whole of the UK in both the commercial and residential real estate markets.