MAGAZINE: Yoo Capital teams with Astarte to explore London niches

Yoo Capital Management, co-sponsor and asset manager behind plans to transform London’s Olympia Exhibition Centre, has created a joint venture with real assets investor Astarte Capital Partners to explore niche property opportunities in London, ranging from entertainment venues to hospitals and schools, across a series of specialised funds.

The partnership tees off with the £400 mln (€463 mln) Yoo Capital Fund II, acquiring property assets in the UK capital which can be ‘transformed into institutional quality core’, according to both firms.

The fund will consider ‘prime infill and edge-of-prime real estate’ with redevelopment and refurbishment possibilities, Astarte said, starting with up to 10 opportunities in the hospitality, entertainment, healthcare and education sectors.

Astarte Special Opportunities Platform (ASOP), the firm’s discretionary co-investment vehicle, is leading the investment in the new platform and providing the model for its structure. ‘We strongly believe that this is the right time for institutional capital to be looking at London,’ said Teresa Farmaki, co-founder and partner of Astarte Capital Partners.

‘Our new platform will give global investors the opportunity to invest in edge-of-prime, off-market, real estate in London, one of the most attractive markets in the world,’ Farmaki added.

Through ASOP, Astarte invests in real assets by forming partnerships with specialist asset operators, providing seed capital for portfolio acquisitions alongside third-party investors and supplying working capital for the organisation and operation of the partnerships.

Stavros Siokos, co-founder and managing partner of Astarte Capital Partners said: ‘This is the maiden investment of our award-winning ASOP platform which is structured to enable investors to access more than $2 bn (€1.8 bn) worth of value-add opportunities in the real assets space.’

Alternative approach
Alternative real asset investor Astarte has to date focused on transportation, natural resources and thematic real estate – in practice everything from billboards to helicopters, with utilities and a few high-end residential investments also in the mix. ‘For this venture, we sought out a partner with specialist real estate knowledge,’ Siokos told EuroProperty, referencing the JV with Yoo Capital.

Yoo Capital, a private partnership led by Lloyd Lee and global property entrepreneur and founder of YOO Group, John Hitchcox, is a ‘fundamental value investor with a long-term value approach’, said Lee.  Yoo executed a high-profile, £300 mln deal in 2017 for London’s Olympia events venue with Deutsche Finance International, which will be subject to a £700 mln transformation comprising performing arts venues, cinemas and jazz clubs as well as co-working, creative studio and office spaces. The project, said Lee, foreshadowed the kinds of deals that Yoo is pursuing in partnership with Astarte.     

Lee said that both firms had identified several gaps in London’s hospitality and entertainment scene, citing a lack of luxury hotels to the west of Marble Arch in London, despite the presence of iconic neighbourhoods such as Notting Hill and Chelsea. Equally, in terms of entertainment venues, he said that beyond the West End, there was little aside from O2, Olympia and Wembley.

‘Given that Brexit is just around the corner, we are trying to get into assets which will be in demand in London, no matter what,’ confirmed Siokos. ‘So as well as entertainment and hospitality, we’ll also be looking at health and educational assets. For us, “edge of prime” offers opportunity to do more than the historically traditional retail, offices and high-end residential.’

However, the fund is ‘on-trend’ with its pursuit of increasingly popular alternatives segments, such as senior accommodation, student accommodation, and campuses for life sciences, Siokos noted. ‘One of the investment principles driving Astarte is the identification of mega-trends,’ he said. ‘We look at major themes like smart cities, the need for food, the need for water and demographics, and try to find best-in-class operators to partner with.’

Lee said that London had proved itself to be perhaps the world’s most stable city for long-term property investment. ‘While there was major oversupply in London in the 1980s, we haven’t seen the city engage in massive over-speculative building since – coupled with an incredibly disciplined planning regime, this makes London genuinely unique in the world,’ he concluded.