Orchard Street’s UK real estate impact fund acquires first asset

UK property investment manager Orchard Street Investment Management has bought a multi-let industrial estate in Aylesford for its impact fund.

The manager’s local government pension schemes-backed Orchard Street Social and Environmental Impact Partnership (SEIP) has acquired Euroway Trade Park in Aylesford in Kent.

IPE Real Assets understands that Orchard Street invested more than £14m (€16.2m) to buy the industrial estate on behalf of SEIP.

The freehold property comprises seven units totalling approximately 89,000sqft. Orchard Street said five of the seven units have lease expiries within 12 months, offering the manager the ability to grow rental income in the short term and materially improve the sustainability credentials of the estate in line with SEIP’s impact objectives.

The acquisition follows the £400m (€466m) first close of SEIP in November last year, with cornerstone investment from Brunel Pension Partnership.

Brunel Pension Partnership, which participated in the initial close of SEIP, was the cornerstone investor on behalf of eight of its 10 local authority pension funds, committed just under £90m to SEIP, the social and environmental impact fund focused on decarbonisation, community engagement and wellness.

SEIP targets value-add commercial real estate investments with the potential to generate a measurable social and environmental impact.

SEIP‘s capital also includes co-investment from Orchard Street’s partners and members of its senior team.

Barney Rowe, portfolio manager of the impact fund at Orchard Street Investment Management, said: “This first acquisition made on behalf of our impact fund represents an excellent opportunity to generate strong financial returns alongside a significant positive social and environmental impact on behalf of our investors.

“We strongly believe that assets which offer high-quality space and boast strong sustainability credentials will command the best rents and values, and this well-located, multi-let asset provides us with numerous opportunities to reposition the estate into a best-in-class industrial property.”

Harry Buxton, an associate at Orchard Street Investment Management, said: “The property’s [Euroway Trade Park’s] low passing rent, its under-supplied location supported by robust occupier demand, and its short income profile offer us the ability to future-proof the property whilst capturing the highly reversionary rents in the near term.

”We have a very active ongoing requirement for value-add opportunities across all property sectors with significant capital ready to deploy today.”

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