A private equity-style fund run by the US asset manager Pimco has established a joint venture to acquire UK retail properties, in a sign of opportunistic interest in the troubled sector.
NewRiver Reit said on Thursday it had set up a joint venture with BRAVO Strategies III LLC, an opportunistic private fund run by the Newport Beach-based asset manager.
The 50:50 venture will invest in retail parks and other retail properties, beginning with a £60.5m portfolio of four retail parks in Aberdeen, Inverness, Dundee and on the Isle of Wight. It has agreed to acquire them from the insurer Zurich at a net initial yield of 9.8 per cent.
The UK’s retail sector has been struggling with the transition to online and rising costs, leading to a series of retailer failures and plunging values for properties in the sector. This is beginning to attract interest from opportunistic investors.
Allan Lockhart, chief executive of NewRiver, said the portfolio provided a “low entry price, robust cash flows and opportunities to extract further income through active asset management and risk-controlled development opportunities”.
NewRiver swung to a £36.9m loss in the year to March, down from a £45.7m pre-tax profit a year earlier, as the sector’s turmoil cut into the value of its properties, which include convenience stores and other local retail.