BL agrees health clubs deal

British Land has agreed the purchase of a portfolio of freehold and leasehold racket clubs from Société Générale for £179m. The portfolio comprises 17 premium racket clubs, mostly in the South East, which will be let on new, 25 year leases to Virgin Active pending its acquisition of the Esporta business.

The deal is conditional on the Office of Fair Trading’s approval of Virgin Active’s acquisition and will be funded through the group’s existing facilities. British Land has bought the properties at a net initial yield of 7.3 percent and an equivalent yield of 8.4 percent.

They will generate an initial annual net rental income of £13m. The properties have a total of 1.7m sq ft of leisure and gym facilities spread over 380 acres. The purchase price represents a capital value of more than £100 a sq ft.

Chris Grigg, British Land chief executive said: “While we remain focused on our core retail and central London office markets, this acquisition demonstrates British Land’s ability to work with banks to unlock opportunities to create incremental value.”