PRUPIM fund buys Sainsbury supermarkets for £125 million

PRUPIM, the property investment arm of insurer Prudential, has bought three supermarkets occupied by Sainsbury for 125 million pounds for a fund that hedges inflation risk. Skip related content

The sale and leaseback deal, made for M&G’s Secured Property Income Fund, is for Sainsbury’s Superstores in Worcester, Truro and Huddersfield, leased for 25 years with rent reviews linked to the retail price index, PRUPIM said on Wednesday.

The fund — which targets prime properties many of which are on sale-and-leaseback arrangements — was launched in August 2007 to meet a growing appetite for investments that mitigate inflation risk, its manager PRUPIM said.

“Pension schemes in particular are increasingly attracted to this fund as properties such as these can help address inflation risk at a lower cost than equivalent government bonds,” said Steffan Francis, Director of Fund Management at PRUPIM.

PRUPIM is a unit of asset manager M&G, which is in turn a unit of Prudential.

Investments volumes in prime-grade UK commercial property are expected to get a boost in 2011, as the rental outlook for the sector warms and investors seek refuge from poor gilt returns eroded by high inflation.

PRUPIM said the fund, offering 3.5 percent yield over index-linked government bonds, also targets other inflation-linked properties with unexpired leases of about 25 years, including offices, hotels, student homes and healthcare.

Source: Reuters