The convenience store sector is being targeted for investment by the creation of the Local Shopping REIT (Real Estate Investment Trust) with a £60m fund.
The Local Shopping REIT (LSR) has just combined with Schroders, the British multinational asset management company, to create an unlisted fund to invest in “convenience retail opportunities”.
The fund will be ungeared and will have an income-based focus.
The fund have appointed Gary Aiken, director at Aiken Commercial in Portsmouth, as local central South Coast agent to find convenience retail stores, tenanted by the likes of Tesco Express and Sainsbury’s Local, with adjacent units let to national multiples and local retailers.
Ideal investment lots will be circa £1m deals are expected to provide an average net initial yield of 6.5%. The fund will also be seeking to identify properties that will offer additional asset management opportunities for LSR to exploit to enhance each asset’s capital value and income stream.
Mike Riley, joint chief executive officer of LSR, said: “Tenant demand for convenience and local shopping assets from both national operators (in particular, supermarkets) and independent traders is holding up well and we look forward to using our specialist management skills and experience of stock selection to work alongside Schroders to build a strong presence in this niche, but growing, sub-sector of the retail market.”
Graeme Rutter, co-Head of Schroder Property Multi-Manager, said: “The local retail fund will be available to our segregated mandate clients and will be a significant holding for our Real Income Fund, which targets resilient income streams and tenants with pricing power in an environment of modest economic growth.”
