(Bloomberg) -- Pacific Investment Management Co. LLC is betting the time is right to buy into Britain's battered retail property market.
Pimco formed a joint venture with NewRiver REIT Plc and bought four retail parks from Zurich Assurance Ltd. for 60.5 million pounds ($76.3 million). The purchase comprises three properties in Scotland and a fourth on the Isle of Wight, some of which have the potential for redevelopment into alternative uses including hotels and warehouses, according to a NewRiver statement on Thursday.
“Pimco share our view that the current market dislocation is providing very attractive buying opportunities,” NewRiver Chief Executive Officer Allan Lockhart said on Bloomberg TV. The aim is for the joint venture to grow to about 500 million pounds of assets in the next few years, he said.
A person with knowledge of the discussions said no deal has been agreed upon yet between Pimco and NewRiver. Laura Batty, a Pimco spokeswoman, declined to comment.
Values for U.K. retail property have been plunging as retailers close stores and negotiate rent cuts in the face of growing competition from online commerce, rising wages and tax hikes. That's caused a drought in deals for malls and stores as potential sellers wait for a recovery and opportunistic buyers try to time the bottom of the market.
The deal with a fund managed by Pimco provides a “a low entry price, robust cash flows and opportunities to extract further income through active asset management and risk-controlled development opportunities,” Lockhart said in the statement.
Read more: NewRiver 2019 FFO Down 7%; JV to Buy Retail Parks for GBP60.5m
--With assistance from John Gittelsohn.
To contact the reporters on this story: Jack Sidders in London at jsidders@bloomberg.net;Anna Edwards in London at aedwards49@bloomberg.net
To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Patrick Henry, William Mathis
©2019 Bloomberg L.P.
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