British Land has confirmed media reports that it is venturing outside its traditional focus on offices and retail assets to acquire a portfolio of racket club properties for £179 mln (EUR 199 mln).

The second largest UK REIT by market capitalisation issued a statement on Friday saying it has agreed to buy a portfolio of freehold and leasehold racket clubs from French bank Société Générale . The portfolio will generate an initial annual net rental income of £13 mln, reflecting a net initial yield of 7.3% and an equivalent yield of 8.4%.

Chris Grigg, CEO of British Land 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. These high quality assets will be operated by a strong, established management team and provide us with a secure and growing income stream.'

Grigg added that he expected more opportunities to emerge in the coming year.

The 158,000-m2 portfolio, focused on the southeast of England, consists of 17 assets with racket club and gym facilities which will be let on new, 25-year leases to international health club chain Virgin Active. The assets were previously owned by the family trust of property tycoon Simon Halabi, which acquired both the properties and the operating business Esporta in 2006 for more than £450 mln. Esporta went into administration a year later. The lending bank Société Générale sold the operating business, but not the properties, to Virgin Active in April this year for £77 mln.

The purchase of the Esporta properties brings British Land's total acquisition spend over the last 18 months to £784 mln. The acquisitions, which include Drake Circus shopping centre in Plymouth, Green Lane's shopping centre in Barnstaple and Hutchinson 3G's UK head office in Maidenhead, as well as a number of development properties, generate annualised incremental rental income of £46 mln.

British Land has a total of £9.6 bn of assets under management.