The Schroder UK Real Estate Fund (SREF) has announced it has partnered with Zurich Investment Foundation Immobilien Europa Direkt (IED) on a 50-50 basis to acquire The Brewery, a prime supermarket anchored, retail warehouse and leisure scheme in Romford, Greater London for £162 mln (€194 mln).
The Brewery comprises a 21-acre site with 545,478 sq ft (50,700 m2) of retail and leisure space anchored by national operators including a Sainsbury’s superstore, Nuffield Health, The Range, Boots, Pure Gym, a 16-screen Vue Cinema and several food and beverage outlets including Wagamama, Starbucks and Costa Coffee. The scheme also benefits from 1,750 car parking spaces and strong sustainability credentials including BREEAM in-use accreditation.
With typical rents and service charges being lower than shopping centres, Schroders expects there will be continued demand for retail park units from discount retailers, convenience-led occupiers, gyms as well as coffee and ‘grab-and-go’ food chains. The sector looks set to outperform other markets, underpinned by the active occupational market and the relatively high-income returns.
Jessica Berney, Fund Manager for SREF, Schroders Capital, commented: ‘The asset offers an attractive initial yield for the fund and is in line with several of the fund’s objectives including growing income returns, increasing exposure in sectors expected to outperform, strengthening future capital performance potential, and improving the portfolio’s sustainability credentials. The acquisition follows the £345 mln industrial swap deal with Segro in October 2021, and continues to demonstrate SREF’s strategic ability to source future opportunities to deliver strong performance for its investors.’
Harry Pickering, head of UK Retail, Schroders Capital, added: ‘We believe in retail assets that perform well for retailers. Our partnership approach to our retail tenants gives us strategic insight into how best to configure the physical real estate for optimal trading performance. The pandemic has accelerated omnichannel retailing sales techniques, helping to secure physical real estate at the centre of a retailer’s distribution network.’
Roger Hennig, fund manager for Zurich Investment Foundation Immobilien Europa Direkt (IED), Schroders Capital, commented: ‘This food anchored, retail warehouse and leisure scheme represents an attractive addition to the portfolio. The asset provides a strong income yield and will further diversify the portfolio, which has now increased in value to over €1.5 bn.’
