ARA Family Office Partners with Savills Investment Management For $500M UK Retail Fund

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Savills Investment Management, an international investment management business with its headquarters in London has secured support from the family office of John Lim, the founder of ARA Asset Management in Singapore for a UK retail park fund and aims to raise £360 million ($500 million).

The Land Managers are the primary investors of Savills IM’s latest funds. It works as the real estate investment division of Straits Real Estate, and JL Family Office.

According to Savills IM, this new fund is to utilize the confliction between the operational performance of UK retail parks and their high yields but low property prices as compared to other sectors.

“The UK retail sector has had a torrid time over the last five years, particularly the high street and shopping centre sub-sectors,” said Harry De Foster, the head of Savills IM UK and the manager of the fund. “This new fund is targeting assets in a sub-sector which has been overlooked and oversold, but has proven its resilience to the headwinds facing the sector. This is a good opportunity to secure assets with a high and secure income yield and we believe it will be very attractive to investors,” he added.

Procuring the Demand

The new fund is a contrarian play that will focus on home delivery and e-commerce. It will acquire retail park assets with relatively low rents, specifically those anchored by discount retail tenants and food providers, such as B&M and Home Bargains Food Warehouse.

“This sub-sector has demonstrated resilience to the trend of online shopping, as sales largely consist of daily necessity and value-oriented items,” Savills IM said. “This part of the market has proven to be appealing to in-store shopping, with the high take-up of click and collect and low unit prices of goods making online and home delivery less viable.”

The fund will draw on the expertise of the retail park team at Savills IM’s parent company in London, Savills Plc, using their research and brokering proficiency to search for properties with a net property income yield of around seven to nine percent or higher.

The Land Managers are led by Andy Lim, the son of John Lim, co-founder of ARA. The boutique real-estate investment firm is under JL Family Office, which manages the private investments of the Lim family. While the family office used to hold a 10 percent stake in the fund through its partner, Straits Real Estate, it announced in April that it would sell its interest in cash to a subsidiary of Straits Real Estate for S$105 million ($78.3 million).

“We are pleased to work with Savills IM in our first investment into the UK,” Andy Lim said. “The country is experiencing a rapid recovery and its growth is set to be the fastest in Europe. By investing in a defensive retail asset class, we hope to capitalise on the pent-up demand from the COVID-19 restrictions over the last couple of years.”

ARA FOUNDER’S FAMILY OFFICE TEAMS WITH STRAITS, SAVILLS IM FOR $500M UK RETAIL FUND‘- Christopher Caillavet, Mingtiandi

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