Federated Hermes joins institutional rush to Retail Warehousing with £45M Deal
14 Jan 2021 | by Jessica Middleton-Pugh, Chris Borland
Retail park in Oxford has traded hands as appetite grows from both logistics and residential investors
- What Federated Hermes has completed a deal to acquire a retail warehousing scheme for £45m
- Why Yield profile on offer attractive compared to industrial sector
- What next Over £300m of retail parks said to currently be under offer with the sector enjoying an uptick in demand
Federated Hermes has joined a rush of institutional capital moving back into retail warehousing with a £45m deal in Oxford, React News can reveal.
The US investment manager has acquired Templars shopping park from PGIM Real Estate. The deal represents a net initial yield of 7.25%.
Templars’ tenant roster includes a mix of fashion, grocery, and homeware. Asda, Matalan, Pets At Home and JD Sports operate units on the park. The 9-acre site in south east Oxford comprises circa 140,000 sq ft of open A1 retail accommodation.
The park was previously traded to Pramerica (now rebranded as PGIM) by KKR in January 2016 for £67m, representing a net initial yield of close to 5%.
The purchase taps into two aspects of the current retail park market. Retail parks are offering significant yield arbitrage to the logistics sector, where pricing continues to tighten, while offering many of the fundamentals desired by investors priced out of industrial stock. Proximity to customer, click and collect optionality and significant sites with underlying alternative value have led to more mature capital re-emerging for product.
Retail parks are also being acquired for their alternative uses, particularly with the drive towards residential development and the search for well-connected brownfield sites close to urban centres leading to a increase in land value. Oxford Templars is seen to to have potential for residential redevelopment in the medium-term.
Patrizia, Columbia Threadneedle, M7 Real Estate and Railpen have all been noticeably active in the retail park market. There are currently close to £300m of deals underway in the UK, according to sources.
JLL acted for PGIM Real Estate. TT&G acted for Hermes.
All parties declined to comment.