Legal & General Investment Management (LGIM) is one of Europe’s largest institutional asset managers and a major global investor. LGIM manages £1.2trn1 in assets, working with a range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors. 

LGIM Real Assets (LGIM RA) has assets under management of £36.8bn2 and is one of the largest private markets investment managers in the UK. Investing in both debt and equity and across the risk/return spectrum, LGIM RA actively invests in and manages assets across commercial, operational, and residential property sectors, as well as infrastructure, real estate, corporate and alternative debt. 

Taking a long-term view to future proof our investments, LGIM RA continues to lead the industry in ESG performance, considering all environmental, social and governance issues at asset level as well as portfolio level. 

1 Firm AUM data as at 30 June 2023 

2 LGIMRA AUM data as at 30 June 2023 (GAV, including crossholdings) 

Sector forecasts


We think long-term fundamentals could be supportive for performance and in our view the significant repricing seen in H2 2022 potentially positions the sector favourably. 

There is more supply risk for logistics than multi-let estates, which will lead to differences in the rate of rental growth, but in the former new construction starts have now slowed sharply. There remains a relative absence of development in smaller units. 

There is cyclical demand risk from debt costs facing SMEs, but long term a need for portfolio optimisation and other structural demand support potentially positions the sector well, in our view. We expect the sector to outperform over our forecasting horizon with returns in excess of 6% per annum. 


Three years after the start of the pandemic, utilisation risks remain in sharp focus. Leasing activity is subdued, and vacancy is rising in line with expectations. Polarisation in performance is evident with rental tension in high-quality assets and significant falls elsewhere. We expect this to remain structural, with sustainability requirements and changes to occupier preference limiting the normalisation of performance gaps. Capital expenditure requirements have also structurally increased, which we expect to drag returns until yields represent fair value. 

We expect the sector to underperform with annualised returns of around 1%, but emphasise significant divergence around this average. 

We expect reasonable returns beyond 2024 after prices have adjusted.


Occupational demand fundamentals are strong for both build-to-rent residential (BtR) and purpose-built student accommodation (PBSA) for both structural and cyclical reasons. The supply side remains restricted relative to this demand and there has been significant resultant rental growth. 

Although the pace of this growth is expected to decelerate and be limited by affordability constraints, investor demand and performance expectations will keep yields relatively firm, in our view, and potentially position both segments well for the long term. 

Public policy risks could alter this path, but our base case is for returns of around 6% for both segments.


We are below consensus, predicated on a cautious view on consumer spending in the near term. We expect further adjustment in rents and yields, although recognise values are closer to being ‘re-based’. 

The repricing seen in lower yielding supermarkets in H2 2022 allows for stronger horizon performance. We remain cautious on shopping centres with persistently high capital expenditure costs dragging returns. Retail parks where rental values have re-based are reasonably well positioned. 

We expect returns for the sector of around 4% with a notable range around this. 

The higher income return in leisure assets plus structural support from consumer spending patterns leads us to be more optimistic for this segment, once cyclical headwinds pass. We expect returns in excess of 5% led by leisure parks.

Investment principles & strategy

As active managers, we place strong emphasis on income-producing assets across both our equity and debt strategies. 

We are a leading investor and owner-operator, meeting the needs of our stakeholders by fostering long-term relationships that empower us to deliver both positive financial and social outcomes. Drawing on the power of our global reach, large-scale capital and operating expertise, we believe we are well positioned to grow the value of our underlying assets and generate long-term returns for our clients. 

LGIMRA’s success is built on the core values that are the foundation of everything we do: 

Investing responsibly for the benefit of our stakeholders and society 

Our commitment to responsible investing is driven by the recognition that real assets have a significant impact on society and its ecosystem. 

Driving change 

As the world continues to change we recognise the need to change with it. That’s why we refuse to accept the status quo across any of our strategies. We believe this presents opportunities for disruptive and innovative thinking – whether it’s rethinking the role of retail in our towns and cities, addressing social inequality, or determining the role of the office in a post-pandemic world.

Strategic corporate development

Strategic corporate development is considered fundamental at LGIM RA, particularly as the demand for private market assets is expected to grow rapidly over the next five years. To ensure we can facilitate such appetite, we have a team dedicated to corporate strategy, the LGIM RA Strategic Change team, exploring routes to build on our accredited core competencies, identify gaps and scale to investment markets in structures that appeal to a diverse client base. Additionally, key considerations such as resourcing and operational developments required to facilitate corporate development are addressed in parallel. As an arm of LGIM, LGIM RA’s corporate development is aligned to the strategy of wider LGIM to modernise, diversify, and internationalise, as well as the overall Legal & General ethos of inclusive capitalism.

Performance verification

LGIM RA measures fund performance against a number of benchmarks which are specific to investment strategy and style. We are also a participant in the Global Real Estate Sustainability Benchmark (GRESB) across all applicable funds. GRESB provides a measure of sustainability.


The AUM disclosed aggregates the assets managed by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong (2018-2019 only). The AUM includes the value of securities and derivatives positions. May not total due to rounding. 

For professional clients only. Past performance is not a guide to the future. The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested. The Information in this document (a) is for information purposes only and we are not soliciting any action based on it, and (b) is not a recommendation to buy or sell securities or pursue a particular investment strategy; and (c) is not investment, legal, regulatory or tax advice. Legal & General Investment Management Limited. Registered in England and Wales No. 02091894. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority, No. 119272.