UK - Aviva Investors' pooled UK real estate vehicle for pension funds has returned to the market by agreeing to buy a Sainsbury's food store under development in County Durham, England.
Terrace Hill Group is developing the 92,333 square foot store, which has been pre-let to Sainsbury's on a 25-year lease, at its retail and leisure scheme at Tindale Crescent in Bishop Auckland.
Aviva Investors Pensions has entered into a forward funding agreement with the developer to purchase the completed store for £27.67m (€30.1m).
"This acquisition marks the return of the Aviva Investors Pooled Property fund to the market as we look to acquire investments in a variety of sectors," said Robert Walton, head of UK institutional real estate funds at Aviva Investors.
"We have a good relationship with the developer of the supermarket site, Terrace Hill, having worked with them previously on other projects.
"We see this funding as an opportunity to invest in a secure, well let investment with guaranteed rental uplift to a strong covenant in a favoured sector," he continued.
The store is expected to open and commence trading by Christmas 2010, with construction starting in November 2009.
Sainsbury's will pay an initial rent of £18 per square foot (£1.66m per annum).
Terrace Hill's leisure and retail park at Tindale Crescent will also include a new stadium for
Bishop Auckland Football Club.
"We are delighted that Aviva is investing with us again having funded retail parks with the group in the past," said Philip Leech, chief executive at Terrace Hill.
"The price achieved reflects a strong appetite amongst investors for well let food store developments which should enhance the returns we expect from our pipeline of similar projects," he added.