Roadside real estate business Barkby has formed a £250m joint venture with Meadow Partners.
The partnership, initially funded with a £100m equity injection, will seek out sites and develop a “substantial portfolio of modern roadside real estate assets”.
In the wake of the jv, Barkby, which once owned a mixed-bag portfolio including coffee shops and car showrooms, intends to change its name to Roadside Real Estate.
At the outset, Meadow, a $6.2bn AUM private equity real estate manager, will own and fund 97% of the jv while Barkby will own and fund 3%. Barkby has an option to increase its stake to 10%.
Barkby executive chair Charles Dickson said: “Roadside Real Estate will offer exciting potential for investors and we believe this jv has the opportunity to create a portfolio worth £250m over time.”
It will focus on buying sites where it can offer consumers a mix of drive-through, “foodvenience”, local logistics and trade counter businesses alongside opportunities to increase EV charging facilities.
Dickson said the focus would initially be on its own pipeline, but this would rise to more than £150m as more stock comes to the market. He added that “additional approaches are being made to the company by vendors”.
“Having successfully developed a small number of roadside sites which have proven our concept, we will seek to rapidly convert our acquisition pipeline to create value for shareholders and our joint venture partner, while delivering valuable community amenities – not least increased access to electric vehicle charging.”
See also: Barkby plans REIT conversion as it eyes £200m pipeline
The deal is a union of Meadow’s money and Barkby’s expertise. As part of the jv, Barkby has established a subsidiary vehicle, Roadside Asset Management, that will provide development and asset management services. Barkby will own 51% of this vehicle, with Meadow owning 49%. The jv will pay the development and asset manager an annual fee based on gross asset value under management and development management fees on the hard construction costs of those assets being developed.
Barkby’s existing wholly-owned portfolio of roadside assets comprises just two schemes, which the jv may consider as investments.
One is in Wellingborough, Northamptonshire, which achieved practical completion in May 2023 and is fully let, providing a contracted rent of £232,300 pa across 14,100 sq ft of rentable space. Occupiers include Greggs, Formula One Autocentres, City Plumbing Supplies and Brewers Decorator Centre.
A second site at Maldon in Essex is expected to reach practical completion imminently and has a contracted rent of £280,000 pa, 78% of which is index-linked with caps and collars, across a total rentable space of 14,200 sq ft.
The pipeline includes a site in Stoke which is currently owned by Meadow, which the jv may consider as an initial acquisition. However, it is still subject to due diligence and negotiation by the development and asset manager
The jv, which will have an initial investment period of 30 months, will be able to request up to £100m of equity funding from Barkby and Meadow to facilitate the purchase of assets.
The jv is targeting a double-digit portfolio IRR for the investment period.
Barkby said it was in negotiations with a potential non-executive chair. On the appointment of a chair, Dickson will become chief executive.
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