Private equity group, Osprey Income and Growth 3 LP, has completed the forward funding acquisition of a £22m Tesco food superstore to be built in Chatteris, Cambridgeshire. The property has been pre-let to Tesco on an unbroken 25-year lease, with rental uplifts index-linked to RPI.
The property will comprise a new, 46,177sq ft supermarket, with a four pump petrol filling station and 310 car parking spaces. Detailed planning consent is reported to be in place and construction is due to commence next month, with practical completion expected in summer 2014.
Osprey Income and Growth 3 LP is a private investor fund arranged by Osprey Equity Partners. The project is being funded through £9.1m of equity provided by high net worth investors and £12.2m of debt secured from Barclays Bank.
Cambridge Property Group (CPG) will be developing the property. Morgan Williams acted for CPG and Knight Frank acted for Osprey.
Alex Munro, partner, Knight Frank retail team, said: “We are delighted to have assisted Osprey in the acquisition of this outstanding asset – the dominant food store in the town leased to the UK’s largest retailer on a 25-year lease index linked to RPI. Osprey’s understanding of the challenges of the development process has enabled their investors to secure a prime asset ahead of the competition.”
The closing of Osprey Income and Growth 3 follows the successful closing of two similar Osprey food store funds: a £37m, 98,000sq ft Sainsbury’s food store in Sunderland, which opened to the public in March 2013; and a £45m, 110,000sq ft Tesco food store in Rotherham, which will reach practical completion in October 2014 (Osprey Income and Growth 1 and 2, respectively).
John White, property director at Osprey Equity Partners, said: “Our investors are attracted to the UK food store sector by the 25-year plus, inflation-linked income from quality tenants and the forward funding structure currently offers the rare opportunity to access these institutional quality assets at a discount to investment pricing. The high 5% pa RPI cap caught our eye on this asset.”