Macquarie enters ASDA ground lease financing

14 December 2023

Macquarie Asset Management, on behalf of Just Group, has partnered with clients to invest £400 million in notes related to a portfolio of commercial ground leases.

The notes are secured against a portfolio of 55 ASDA supermarket sites across the UK. The innovative transaction enables ASDA Group to raise £400 million of alternative long-term financing while retaining its freehold property interests. The transaction also enables Macquarie Asset Management’s clients to gain exposure to a high quality, long-term income stream from ground lease payments generated by the portfolio.

Hugo James, Managing Director at Macquarie Asset Management, said: ”As the pace of risk transfer from pension funds to the insurance sector continues to grow, our ability to structure and invest in high quality income streams is increasingly important for our clients. We believe that the innovative structure created for this transaction can provide borrowers with a scalable financing option not previously available in the asset class.”

Nenna Gilmour-Platt, Head of Investment Strategy at the retirement specialist Just Group, said: “We help people achieve a better later life, it’s our purpose at Just and why we exist. Investments like this help us fulfil that purpose by providing long-term income for our customers; and at the same time enable businesses to continue to provide essential services to communities around the country. We’re pleased to add this to the portfolio of investments we’ve completed with Macquarie in healthcare, education, and local authority sectors across the UK.”

Macquarie Asset Management launched its secure income real estate strategy in 2020 to provide institutional clients with access to long-term and scalable income streams. Since it launched, the team has raised commitments of over £1.2 billion from insurance and pension fund clients and invested across a range of sectors including hotels, day nurseries, NHS and local authority facilities.

This investment, in partnership with Just Group, follows a suite of activity between the two businesses including financing the development of specialist healthcare service facilities in Southampton. To date, Macquarie Asset Management and Just Group have completed nine transactions, helping to finance the development and operation of secure real estate assets across the hospitality, education, local authority, and health sectors nationwide.

Source: Macquarie