Rockspring Property Investment Managers has reportedly acquired a portfolio of industrial property assets from Royal Bank of Scotland.
The London-based firm has bought 13 logistics and manufacturing units for £27 million (€29 million; $44 million), reflecting a 13.5 per cent net initial yield, said the Financial Times today. The bank will provide a new debt facility amounting to about 60 per cent of the purchase price, with the remainder of equity from Rockspring's Transeuropean IV fund, reported the newspaper.
IO Asset Management will manage the assets, some of which are not producing income.
The way the deal is structured, Royal Bank of Scotland will retain a share in any future upside from the portfolio.
News of the deal comes on the same day as the firm announced a first close for its UK Value Fund on £152 million (€168 million; $252 million) against a final target of £400 million.
The firm said investors in the fund would be able to take advantage of acquisition opportunities arising from increased commercial property yields that are now cheaper than the five and 10 year historic averages, market mispricing, a limited availability of debt and the opacity in the UK real estate market.
The vehicle will have the ability to invest in direct commercial property, joint ventures, pooled or unitised property vehicles and companies owning specifically targeted assets. It will focus on small-to-medium sized assets primarily in the office, retail and industrial sectors that generate above average returns in themselves, Rocksrping added.
Neal Shegog, partner of Rockspring and head of asset management is the fund director of the UK Value Fund and Richard Bains is the fund manager.
Robert Gilchrist, chief executive, said: “Our ability to raise equity in these challenging conditions is a reflection of the strong track record of our senior management team in managing through previous market cycles.”
Shegog added: “The UK commercial property market has undergone a significant re-pricing process since the peak of the market in June 2007. Asset price adjustments, together with the encouraging underlying property fundamentals suggest that the UK market is not only perceived to be offering the best value amongst continental markets but is proving increasingly attractive against other asset classes.”
He said as markets tend to overshoot on the way down as well as on the way up, the firm believed that clear opportunities were emerging to buy assets at below value. “This is likely to occur through, amongst other things, a lack of available debt and distressed selling,” he said.