Metric launches joint venture with USS
Published: 15 November, 2011
Metric Property Investments has created a £150m joint venture with Universities Superannuation Scheme to buy small, higher yielding,retail parks
The new fund will invest in retail parks and solus units ranging in value from £2m to £20m. The target portfolio yield on cost, once established, will be in excess of 7 per cent, and USS has committed an initial £50m of equity, with Metric committing £25m for a one-third equity stake. The Joint Venture will have a target loan-to-value ratio of 50% across its entire portfolio.
To kickstart the fund Metric has agreed to sell it two properties in Inverness and Swindon for a combined cost of £19.9m.
In Inverness, the fund will forward purchase Metric's 30,000-sq ft retail park development on completion for £9.7m, reflecting a net initial yield of 6.4 per cent. The park is already fully pre-let to DFS and Carpetright for an average of 17 years with rents reviewed to RPI. It is due for practical completion in January 2012.
And in Swindon, the fund has acquired the 57,700-sq ft Fleming Way Retail Park for £10.2m , reflecting a net initial yield of 7.2 per cent. The park is adjacent to the town centre and is let to The Range and Halfords for a weighted unexpired lease term of over 20 years off average rents of £13.45 per sq ft.
Metric chief executive Andrew Jones said: "We are continually looking for ways to grow our business and we are therefore very excited to be entering into this new joint venture 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.
