Terrace Hill Group plc (AIM: THG), a leading UK property development and investment group, announces the completion of the forward funding of a £35 million (approx. €42.4 million) supermarket, pre-let to Sainsbury's on a 25-year lease.
The property will comprise a new, 97,729 ft² (approx. 9,000 m²) Sainsbury's supermarket, with six pump petrol filling station and 517 parking spaces, located in Sunderland, Tyne and Wear. Construction is due to commence in April 2012 with store opening expected in March 2013.
The acquisition and development has been forward funded by Osprey Supermarket Income and Growth 1 LP, a private investor fund arranged by Osprey Equity Partners. The project is being funded through £15 million of equity provided by UK high net worth individuals (both directly and through personal pension funds) and £20 million of debt provided by HSBC Bank plc.
The project reflects Terrace Hill's strategic decision to focus further on the supermarket development sector and is one of a number of similar developments within the Terrace Hill pipeline. On completion of the forward funding, the Company received £2.5 million representing the recovery of its working capital and an initial profit payment.
Osprey Supermarket Income and Growth 1 LP is the first of a series of private investor funds launched by Osprey Equity Partners, designed to achieve attractive income and growth returns underpinned by secure, well-let, direct commercial property assets.
Philip Leech, Chief Executive of Terrace Hill, commented: "The securing of forward funding is a significant step for the project, and underlines Terrace Hill's ability to source financing for our developments, in spite of the challenging funding environment.
"We continue to see potential for further growth in the foodstore sector, and believe that our activities in this market will generate good returns on behalf of our shareholders as we progress this and our pipeline of opportunities."
John White, Director and Head of Property, Osprey Equity Partners, commented: "We are delighted to be working with Terrace Hill and HSBC on this project. The fund was oversubscribed and reflects the appeal of secure, income producing property assets amongst private investors and SIPPs, especially against a backdrop of continuing volatility in equity markets and with historically low returns on cash deposits."
Source: FTI Consulting