Savills Investment Management has launched a UK retail park fund with a £360m target capital raise, securing Singapore’s Straits Real Estate and the JL Family Office’s real estate arm as cornerstone investors.
The investment marks JLFO’s debut in the UK. The family office manages the private investments of Asia Pacific real estate veteran John Lim. JLFO has ties with Straits Real Estate, a subsidiary of the Straits Trading Company, having sold its stake in the real estate firm back to Straits Trading earlier this year.
Straits Real Estate will commit up to £60m to the fund through its SRE Venture 18 vehicle.
Savills IM said it seeks to capitalise on the sector’s “strong income-producing characteristics”, underpinned by high yields, low rents and low vacancy rates of close to 5%.
The investment manager added that falling retail property prices mean assets let to strong tenants could be acquired with deals that reflect net operating income yields of 7-9% or more.
It aims to buy retail parks with relatively low rents, with a preference for food anchors and discount retailer tenants such as B&M and Home Bargains, as well as bulky goods occupiers including DIY operators.
The fund will be managed by Harry de Ferry Foster, head of UK at Savills IM, who also manages the Charities Property Fund. He will be supported by director Danny Al Dilmi.
Andy Lim, group chief executive of JLFO and founder of its real estate division The Land Managers, said: “The country is experiencing a rapid recovery and its growth is set to be the fastest in Europe. By investing in a defensive retail asset class, we hope to capitalise on the pent-up demand from the Covid-19 restrictions over the last couple of years.”
Lim added that there are “more exciting partnerships” to follow, as the business aims to grow its investments “in both Singapore and overseas”.
De Ferry Foster said: “The UK retail sector has had a torrid time over the past five years, particularly the high street and shopping centre sub-sectors. This new fund is targeting assets in a sub-sector which has been overlooked and oversold, but has proven its resilience to the headwinds facing the sector.
“This is a good opportunity to secure assets with a high and secure income yield, and we believe it will be very attractive to investors.”
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