Greenridge Investment Management has acquired three regional retail parks for just over £43m and is now looking to increase its weighting towards the sector with a first round raise of £250m for a new fund underway, React News can reveal.
Greenridge’s three acquisitions represent a blended initial yield of 7.85%. It has acquired Elgin Retail Park from Credit Suisse for £19.1m; Bridge of Don from Aberdeen Standard for £14.25m; and Blocks A & B at Great Homer Street, Liverpool, from St. Modwen for close to £10m.
Counter-cyclical opportunities
The trio of deals marks out Greenridge, alongside NewRiver, as one of the first wave of counter-cyclical buyers looking to take advantage of the lack of competition in the market with the reduced pricing levels on retail stock providing a greater chance of value enhancing yield compression should there be a shift in sentiment.
We believe that the current indiscriminatingly negative sentiment towards the retail sector provides a compelling investment opportunity. Careful asset selection and relevant asset management offer a strong income play.
Bik Bhuptani, director, Greenridge.
Greenridge, which was founded by Bik Bhuptani and Paul Simmons in 1994, see’s strength in strategic out-of-town retail investment where income is well secured to successful occupiers, within established communities which are the dominate schemes in those areas.
Pragmatic on CVA tenants
The firm also takes a pragmatic viewing on the spate of CVA’s sweeping some of the retail market. Bik says: “More Company Voluntary Administrations are also being threatened, allowing retailers to divest stores and lease obligations while many landlords contest that the burden of restructuring and resizing store portfolios is thrust upon them. However, beyond the attention-grabbing negative headlines about UK retail, a complex picture is emerging, full of challenges but also opportunities. We don’t mind schemes with CVA tenants as long as they trade from well performing stores and are top tier.”
St Modwen’s regeneration project at Great Homer Street
Greenridge raising £250m
Elgin, Bridge of Don and Great Homer were funded out of an existing equity pot. However, Greenridge is now raising for a new £250m fund. The first round raising is expected to close in March next year, with target gearing of 50% it will have firepower of £500m. The fund will invest predominantly in regional office and retail assets.
Bik adds: “Our analysis reveals a retail market that is far more nuanced, complex and multi-faceted. For example, European discount giants Lidl and Aldi continue to take record market share in the grocery sector, UK discounter B&M reported positive like-for-likes, as did big box retailers such as Dunelm, Dobbies, Pets at Home and Hobbycraft, plus ‘big four’ supermarket groups Tesco and Morrisons.
“In our opinion, the current situation – largely fuelled by property company financial requirements and an overly-negative, generalised view of retail – has created opportunities across the retail sub-sectors. In addition, retail parks provide the ‘ease-of-use factor’ thanks to their greater accessibility for customers, given that they are typically easy to reach by car and have ample, free parking for shoppers.”
