Warwickshire based IM Properties has invested more than £12 million in the forward purchase and development funding of a Chicago supermarket.
Working in partnership with Chicago based Bradford Real Estate Services, IM Properties has forward funded the development of the 71,248 sq ft supermarket in Vernon Hills.
The company has secured a 20 year lease of the property to Roundy’s Supermarket’s Incorporated at an annual rent in excess of £1 million. A successful grocery brand headquartered in Wisconsin, Roundy’s operates under five retail banners, with the IM Properties supermarket trading as a Mariano’s Fresh Market.
IM Properties managing director Tim Wooldridge is delighted to be expanding the company’s US portfolio with this latest deal.
He said: “US based developers were struggling to secure funding from their banks and we recognised an opportunity to expand IM Properties’ portfolio in the US by forward funding retail developments such as this. We have a member of the IM Properties team based full time in America and this has worked extremely well in helping us to secure this deal and build a close relationship with our tenant and development partner.
“Such has been the success of this first supermarket, that we are already progressing another property for Roundy’s in the nearby Palatine district of Chicago, once again with developer Bradford Real Estate Services.”
Forward funding transactions are a way to create new investment opportunities and are a tax efficient method of structuring development transactions. Typically, the transaction will involve the sale to a lender of a bare site with a pre-let in place conditional on construction of a building with the buyer agreeing to fund the scheme and then acquring the building at the end of the process minus the construction costs.
Focussing on the retail sector, IM Properties entered the US market in December 2007 with the purchase of a 135,000 sq ft retail store in Newport News, Virginia which is master-leased to Best Buy.
The company currently owns property valued at £50 million in the US with a target to increase the portfolio beyond £100 million in the medium term.
Elsewhere the company has completed a major acquisition of a 45 acre development site off the M1 in Eastwood, Nottingham.
Kevin Ashfield, development manager at IM Properties, said the Eastwood site had been purchased due to its prime location and the fact that the site has an existing outline planning permission for various uses.
“This is an important employment site for Nottingham and one of the few development schemes close to the M1 that can take up to one million sq ft of distribution space.
“There is growing demand for larger design and build requirements due to the lack of available space capable of offering larger buildings.
“This has been proven by Marks & Spencer recently taking 900,000 sq ft at East Midlands Distribution Centre (EMDC) in Castle Donington and the Co-operative Group committing to a new 480,000 sq ft warehouse in Derbyshire, just off Junction 28 of the M1.
“We are intending to implement works to provide the site infrastructure to enable us to deliver a bespoke building within 12 months. IM Properties has a reputation for deliverability and we fully intend to build on this with our acquisition of the site in Eastwood”.
The purchase of this 45 acre site at Eastwood is the first of a number of acquisitions IM Properties is looking to make to expand its portfolio of distribution sites.
The property group has £25 million to invest in distribution sites across the UK.
Agents FHP acted for the vendor BGL Landfill Ltd, whilst IM Properties represented themselves.