Morgan Stanley forms £250m UK retail JV, completes debut purchase

The US firm has linked up with NewRiver Retail to form a £250 million investment vehicle

Morgan Stanley Real Estate Investing has formed a joint venture investment vehicle with UK retail-focused firm NewRiver Retail, kicking off with the £49 million (€54 million; $73 million) purchase of a nine-asset portfolio.

The portfolio, bought from Swiss bank UBS’s Triton property fund, totals 400,000 square feet of retail space and is let to more than 100 tenants. 

It is the first investment of the closed-ended partnership, which has the capacity to acquire more than £250 million of assets over two years.

The vehicle has an overall life span of about five years, although additional equity commitments could be added at a later stage. These will be decided on a transaction by transaction basis.

NewRiver Capital Limited, which is a wholly-owned, London-based subsidiary and adviser to NewRiver, is to be the asset manager for the JV and will receive management fees as well as performance-related returns.

Under the terms of the partnership, Morgan Stanley has the right to convert its interest in the JV or part of it into shares in NewRiver.

Both parties have committed equity capital with the senior debt facility being provided by Santander Corporate Banking.

NewRiver said the JV and its initial acquisition is a further “significant step forward” since its IPO last September.

The firm is being led by former banking heavyweight Paul Roy. Roy was at Merrill Lynch for 30 years, at one time serving as co-president of Merrill Lynch’s global markets and investment banking division.

David Lockhart, founder and former chief executive of a Scottish property company called Halladale has become a director of the firm. Lockhart floated Halladale on London's Alternative Investment Market (AIM) in 2001.