NewRiver has snapped up two Scottish retail parks and part of a third under a joint venture (JV) deal worth more than £60 million, as it targets further acquisitions north of the Border.
The investment trust has purchased Kittybrewster Retail Park in Aberdeen, Telford Retail Park in Inverness, and two units at Kingsway East Retail Park in Dundee, as part of a new JV with Bravo Strategies, a fund managed by the Pacific Investment Management Company.
A fourth site, on the Isle of Wight, has also been purchased as part of the deal.
The shopping assets were acquired from Zurich Assurance for a combined total of £60.5m, reflecting a net initial yield of 9.8 per cent.
Kittybrewster offers a 13-unit site with 154,400 sq ft of retail space, while Telford provides 179,500 sq ft. The acquisition at Kingsway East comprises two units, currently let to discounter B&M and home furnishings retailer Harry Corry.
Terms of the deal have been agreed in principle, with the acquisition to be completed once the JV is established. It is part of a wider strategy to acquire and manage a portfolio of retail parks in the UK.
Despite the current turbulence in the retail sector, NewRiver chief executive Allan Lockhart told The Scotsman he is targeting a portfolio of £500m for the JV, as the UK retail market is “starting to look attractive” to new capital.
He said: “We are very positive about Scotland. I see no reason why we would not continue to allocate capital into the Scottish markets.
“The sentiment in the retail real estate market is very, very negative. That’s been leading to declining capital values.
“Therefore from an entry price perspective the retail sector is become more attractive relative to other sectors like industrial, logistics and distribution. We feel that the next year or so provides a very attractive buying period.”
The NewRiver portfolio includes Burns Mall in Kilmarnock, Newkirkgate in Leith and The Piazza in Paisley.
It will hold a 50 per cent interest in the gross assets of the new JV and take half of the net rental income, with its share valued at £3.1m per annum.
This comes as NewRiver unveiled its annual results, which showed that funds from its operations fell by almost £4m to £56.4m. The trust pointed to an unfavourable comparison as the cause of the drop, after recording £4.8m profit from the disposal of assets in the previous year.
It currently has a £1.3 billion portfolio of 34 community shopping centres, 19 retail parks and more than 650 pubs.