Commercial Finance Specialists

Property and pension investment groups are to combine in a profitable commercial development venture.

Metric Property Investments, the UK real estate investment trust, has entered into a £150 million joint venture with Universities Superannuation Scheme Ltd (‘USS’), which will be known as the Metric Income Plus Limited Partnership (MIPP).

Their mission will be to acquire small retail parks valued between £2 million and £20 million which will then yield 7% or above. The project is being funded by USS' initial equity commitment of £50 million, while Metric is investing £25 million for a one-third stake. Metric is to take responsiblity for buying and asset management initiatives over the initial five year lifespan of the project and will receive a small annual asset value fee of the portfolio as a fee.

MIPP will assume control of two properties from Metric. The 58,000 sq. ft Fleming Way Retail Park near Swindon town centre has been bought for £10.2 million, and is expected to return £13.45 per sq. ft in rent. MIPP will also purchase Metric's developing 30,000 sq. ft commercial development in Inverness for £9.7, which is already pre-let to Carpetright and DFS for an average of 17 years.

Andrew Jones, Metric's Chief Executive, commented: "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.

"Furthermore, this access to institutional and third party equity allows Metric to leverage its strong asset management platform and increase the scale of our business without tying up significant investment capital, as well enhancing our recurring earnings stream."

The Head of Property at USS, Graham Burnett, said: "Our fund continues to be an active investor in the UK property market, with acquisitions totaling in excess of £1 billion over the last three years. This joint venture enables us to access Metric’s market intelligence and asset management expertise to build a portfolio of smaller retail warehouse parks with an emphasis on higher income return."