Long lease propertyLong lease property

There has been increasing demand from pension funds for investment products which can provide stable and inflation-hedged revenue streams capable of matching long-term liabilities. Many investors have also been seeking a defensive alternative to traditional property allocations without necessarily sacrificing the long-term upside potential of property investment.

An investment in long lease property offers institutional investors the opportunity to access secure, inflation-linked income and realise the potential for capital growth that comes from being invested in real assets over the medium to long-term.

By investing in long lease real estate, investors can access long term (20 years plus) contracted index-linked income, supported by underlying real estate values and the credit quality of the tenants. This, in the medium to long-term, can provide secure, rising, inflation-mitigated returns at a substantial risk-adjusted return premium over alternative fixed income investments.

M&G has developed the specialist skills and knowledge to deliver consistently strong returns from these valuable, income producing assets through its investment of approximately £3.8bn* in long lease real estate over the last decade. M&G’s combined real estate and fixed interest experience brings a highly disciplined approach to the investment management of long lease property.

Learn more about this highly popular asset class, its benefits and our offering on these pages. If you have any questions about long lease property investment, then please get in touch with us.

*as at 31 December 2011

About long lease property

Essentially, long lease property investment is similar to traditional property investment, except that long lease property provides much greater bond like qualities, mainly as a result of the security of cash flows delivered by materially longer-term obligations to make rental payments to the landlord. Please see our ‘overview of long lease property’. 

Why long lease property

Long lease prop­erty can prov­ide sec­ure, rising, in­fla­tion-mit­igated re­turns at a sub­stan­tial risk-adj­us­ted re­turn pre­mi­um over alt­erna­tive fixed in­come in­vest­ments, an outc­ome of part­icu­lar inter­est to pen­sion schemes with long-dated in­flation-linked liab­ilities. Find out more about the investment case for long lease property.

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M&G Investments is a business name of Prudential Pensions Limited and M&G Investment Management Limited, and used by other companies within the Prudential Group. Prudential Pensions Limited and M&G Investment Management Limited are registered in England and Wales under numbers 992726 and 936683 respectively with their registered office at Laurence Pountney Hill, London, EC4R 0HH. Registered for VAT number, GB235 3237 81. Prudential Pensions Limited and M&G Investment Management Limited are authorised and regulated by the Financial Services Authority. Prudential Pensions Limited is registered on the FSA's register, No. 110434 (www.fsa.gov.uk/register).  M&G Investment Management Limited is registered on the FSA’s register, No.119328 (www.fsa.gov.uk/register). 
Prudential plc is not affiliated in any manner with Prudential Financial, Inc. a company whose principal place of business is in the United States of America