USS agrees Butlin’s ground rent deal

Universities Superannuation Scheme Limited (acting in its capacity as corporate trustee of the Universities Superannuation Scheme (USS), the UK’s largest private pension scheme by way of assets) has acquired the real estate assets of the famous holiday resort operator Butlin’s for approximately £300m from the Blackstone-owned Bourne Leisure Group.

USS has, via its in-house Private Markets team at USS Investment Management (USSIM), acquired the underlying real estate interest of the three Butlin’s sites at Skegness, Minehead and Bognor Regis , in what will be a long-term investment for the scheme. This type of agreement is increasingly common in the hospitality and leisure industry and will have no impact on Butlin’s day-to-day operations or ownership.

This transaction continues USSIM’s strategy of investing in long-dated inflation and nominal income streams that are aligned with USS’s long term liabilities. To date, USSIM has built a c.£3bn portfolio of private real estate and credit assets which provide USS with important hedging qualities whilst bringing innovative long-term financing solutions to range of counterparties and market participants. USSIM has ambitions to grow this portfolio substantially over time.

Mike Powell, Head of Private Markets Group at USSIM commented: “We are very pleased to conclude this acquisition. Butlin’s is a much-loved British institution and this acquisition represents a significant investment in its future whilst providing the long term cashflows that USS needs to pay the pensions promised to our members.”

Gowling and Cushman & Wakefield advised USS and Eastdil and DLA advised Blackstone.