Orchard Street’s Impact Fund acquires South East London last-mile industrial estate for c. £21 million

Asset to be transformed in line with stringent Impact Fund objectives, targeting an accelerated route to net zero carbon alongside location specific social needs. 

Orchard Street Investment Management (‘Orchard Street’) has completed a further acquisition on behalf of its £400 million Impact Fund. The Orchard Street Social and Environmental Impact Partnership (‘The Fund’) has acquired an ultra-urban, highly reversionary industrial estate in Charlton for c. £21 million.

The fully-let freehold estate is located in an established commercial centre in South East London, approximately six miles east of Southwark and London Bridge and 1.5 miles south east of Greenwich Peninsula and The O2 Dome. The property benefits from last mile accessibility to Central London, Canary Wharf and the wider M25 motorway network, whilst being adjacent to the Charlton Riverside opportunity area which is targeting the redevelopment of existing industrial space into 7,500 new homes and other alternative uses. This reduction in industrial stock is expected to enhance rental growth prospects for the property and boost occupier demand during the Fund’s ownership.

All nine units are subject to a lease event in the next three years, providing opportunities to significantly grow the passing rent from its very low rental base and improve the sustainability credentials of the estate in line with the Fund’s Impact objectives. The Fund intends to undertake low embodied carbon refurbishments across the 1980’s estate to improve EPCs from B to A+ ratings, electrify units to reduce carbon emissions, install solar PV panels and air source heat pumps and add EV charging capabilities to the property. The Fund is also targeting significant biodiversity net gains and will partner with local institutions to provide an internship and apprenticeship programme focused on skills and training for each planned refurbishment.

Orchard Street’s Social and Environmental Impact Partnership targets value-add real estate investment opportunities with the potential to generate a measurable social and environmental impact, via the decarbonisation of buildings, investing in local communities, and improving the health and wellbeing of building users and the local population. This transaction follows the Fund’s inaugural acquisition of Euroway Trade Park, a multi-let industrial estate in Aylesford, last year.

Barney Rowe, Portfolio Manager of the Impact Fund at Orchard Street Investment Management, commented: “This strategically located, multi-let asset represents an excellent addition to the Impact Fund’s portfolio. The estate won’t be environmentally compliant by the end of the decade without critical decarbonisation works, which we can address through leveraging our asset management expertise. The strength of its location and its multi-let profile provides us with numerous opportunities to improve its sustainability credentials whilst importantly allowing us to capture the highly reversionary rents in the near term to generate value on behalf of our investors.”

Orchard Street was advised on the acquisition by DTRE, whilst the seller was advised by Gerald Eve.