PRUPIM fund buys Sainsbury supermarkets for 125mln pounds

LONDON | Wed Jan 19, 2011 7:02am EST

LONDON (Reuters) - PRUPIM, the material goods investment arm of UK
insurer Prudential (PRU.L), has bought three supermarkets occupied by
Sainsbury (SBRY.L) for 125 million pounds for a fund that hedges
inflation risk.

The sale and leaseback deal, made for M&G's Secured Material goods
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

Investments volumes in prime-grade commercial material goods 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

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, counting offices, hotels, student
homes and healthcare. (Reporting by Daryl Loo; Editing by Andrew
Macdonald) (See for the global service for
real estate professionals from Reuters)

Source: Reuters.Com