Orchard Street Investment Management is scaling up what has become one of the UK's most active real estate decarbonisation investment programmes with a major investment drive of £2B to £3B over the next few years.
The firm's latest evergreen decarbonisation fund has already attracted two rounds of commitments from local government pension schemes keen to put money to work in impact investment and making assets more sustainable while also hitting return targets.
Far from seeing sustainability and healthy profits as mutually exclusive, the company has doubled down on an open-ended, UK-only strategy that has seen it expand into a diverse range of assets.
“We're taking brown assets that are discounting because they're not fit for purpose, upgrading them to make them better for the occupants, reducing occupational costs for the tenant, allowing them to pay a little bit more in rent, and creating a more resilient, future-proofed asset,” Orchard Street partner Tom Chadwick said.
Chadwick and Head of Sustainability and ESG Kathryn Barber told Bisnow where they see the big investment opportunities, why secondary offices are a retrofit headache but living offers untapped potential, and why what Chadwick calls a “roll-your-sleeves-up” active asset management approach is the company’s mantra.
Orchard Street, which has £1.8B of assets under management, completed the first acquisition on behalf of its £400M Orchard Street Social and Environmental Impact Partnership in January, when it acquired the seven-unit, 89K SF Euroway Trade Park, a multi-let industrial estate in Aylesford.
It is installing solar panels and electric vehicle charging hubs at the freehold property, electrifying all units across the estate, and improving the energy performance certificates to A and A+ ratings from C to E ratings.
The acquisition followed the first close of the fund in November. Cornerstone investment came from Brunel Pension Partnership, one of the UK’s LGPS pools, and Orchard Street’s partners and its senior team co-invested.
Orchard Street secured an additional £250M for the fund in May, setting it up to build a portfolio with a gross asset value of more than £750M. It is focused on industrial, retail parks and the living sectors, particularly single-family housing and senior living, with typical lot sizes ranging from £25M to £75M.
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