Retail real estate investment trust Metric Property Investments has today announced that it has established a £150 million joint venture (JV), which will aim to acquire small, high yielding, income-focused retail parks.
The partnership with pension fund Universities Superannuation Scheme (USS), dubbed the Metric Income Plus Limited Partnership (MIPP), will look to take over parks and solus units ranging in value from £2 million to £20 million.
MIPP has already taken on an Inverness retail park which it will forward purchase upon completion for £9.7 million, reflecting a net initial yield of 6.4 per cent.
The JV has also acquired the 57,700 sq ft Fleming Way Retail Park in Swindon for £10.2 million, reflecting a net initial yield of 7.2 per cent.
Following today’s announcement, USS has committed an initial £50 million of equity to MIPP, while Metric has invested £25 million for a one-third equity stake. The JV will have a target loan-to-value of 50 per cent across its entire portfolio.
Andrew Jones, CEO of Metric, commented: “We are continually looking for ways to grow our business and we are therefore very excited to be entering into this new JV with USS, one of the UK’s leading pension funds.
“We will look to take advantage of opportunities to acquire operationally strong, well let, long-dated income at prices 250 basis points above the current cost of debt.
“Furthermore, this access to institutional and third party equity allows Metric to leverage its strong asset management platform and increase the scale of our business without tying up significant investment capital, as well enhancing our recurring earnings stream.”
Metric, which is run by three former British Land executives, raised £175 million through an IPO last year.
Over the last 18 months it has acquired a plethora of commercial properties, including Landsec’s Havens Head Retail Park in Milford Haven for £14.4 million.