International investments manager M&G has completed a sale and lease back deal with Gala Leisure Limited on a portfolio of 47 bingo clubs.

Gala is the UK's largest bingo operator and the portfolio is worth GBP 173.4million, which represents a net yield of 8.46 per cent.

The deal represents more than 40 per cent of Gala's 127 clubs in the UK, with 36 of the sites being freehold and the remaining 16 leasehold.

The majority of the clubs are purpose built or modern flat floor conversions and 12 are "heritage clubs", which are usually converted town halls or cinemas.

Manager of M&G's secure property income fund, Ben Jones, said: "This is a significant investment in a portfolio of key operating assets of a market-leader in the leisure industry and the transaction offers growing income over the long term, which is what our pension fund clients continue to seek.

"We have invested more than GBP 1billion in the long-lease real estate this year and continue to complete deals of this kind with companies that have substantial operational real estate assets."

The capital for the deal is provided by the GBP 2.5billion M&G Secured Property Income Fund, which invests in and develops a wide range of real estate, such as supermarkets, hotels, offices, student accommodation and residential buildings.

Property is leased to tenants over the long term and provides M&G's institutional pension fund investors with bond-like returns linked to inflation.

The Gala deal means M&G has brought more than GBP 5billion of private financing to corporates and institutions in the past 12 months.

Mark Hutchinson, co-head of alternative credit at M&G said: "A new financing landscape has emerged following the financial crisis in 2008 where pension funds and institutional investors are increasingly providing finance over the long term in areas where banks previously dominated the market."

"They are attracted to the contracted cash flows and often enhanced security private investments can offer, giving greater stability for trustees and plan sponsors," he added.

First published 08.01.2015

Lindsay.sharman@wilmigton.co.uk