L&G and Federated Hermes merge UK property funds worth $6.37bn

Legal & General (L&G) and Federated Hermes announced on Monday that they have merged their commercial UK property funds to form a combined portfolio valued at about £4.7 billion ($6.37 billion)

The merger transfers ownership of the Federated Hermes Property Unit Trust (FHPUT) real estate holdings into L&G’s existing Managed Property Fund (MPF), significantly expanding its asset base.

Commercial real estate in Britain has been under pressure as higher interest rates and shifts to remote working since the pandemic have weighed on rents and property values . L&G said the MPF had been “acquisitive over the last 18 months,” and that adding FHPUT’s assets would “continue to expand and strengthen our property portfolio,” according to Rob Codling, head of real estate funds at L&G . In practical terms, most investors in the Federated Hermes fund will see their holdings converted into L&G MPF units, giving them a stake in a larger, diversified property pool .

The deal underscores a trend of consolidation in UK real estate funds as managers adapt to market challenges. FHPUT, launched in 1967, and the L&G MPF (established in 1971) together will own offices, retail properties, and industrial sites across the country. L&G noted that completing this merger will preserve liquidity and scale, potentially benefiting unitholders by spreading risk. The companies said the combined fund maintains the same investment objectives and will continue to invest in high-quality assets throughout Britain.