Pramerica Real Estate Investors is to make a specific bet on retail property in the UK through the formation of a joint venture with an operating partner, The Local Shopping REIT.
The US firm said the joint venture would commit up to £37 million (€43 million; $57.7 million) to buy assets in the UK neighbourhood and convenience sector. With debt, the vehicle could amass around £100 million of spending power.
Pramerica, the Parsippany, New Jersey-based real estate investment and advisory business of US firm Pramerica Financial, is committing 80 percent of the equity to the vehicle while its operating partner is providing the rest.
The JV is structured so that The Local Shopping will act as manager and be responsible for sourcing the investments. The anticipated duration of the venture is five years, with a two-year commitment period.
Target investments are those with ‘significant potential for future rental growth’ and the opportunity to deliver added value through asset management, both firms said.
In a statement, they added: “The JV will focus primarily on retail parades and precincts located in suburban and neighbourhood locations where the properties are well placed to support the convenience and ‘top up’ shopping requirements of the surrounding population.”
In a first deal, the venture has agreed to purchase a property in Stanwell, Middlesex let to supermarket group Sainsbury’s and local tenants for £1.6 million.
Pramerica’s partner, The Local Shopping REIT, went public on the London Stock Exchange in May 2007 and has a portfolio of around £187 million of assets under management.
The firm was started by Mike Riley and Nick Gregory, both of whom previously worked at UK private property company Castlemore Securities.
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