Orchard Street’s Impact Fund makes first acquisition with South East industrial estate

Orchard Street will transform asset into a highly sustainable estate through active asset management, in line with stringent Impact Fund objectives.

Orchard Street Investment Management (‘Orchard Street’) has completed the first acquisition on behalf of its £400 million inaugural Impact Fund. The Orchard Street Social and Environmental Impact Partnership (‘The Fund’) acquired Euroway Trade Park, a multi-let industrial estate in Aylesford.

Located within 10 minutes’ drive of the M2 motorway and 20 minutes’ drive of the M25, the property is well-positioned for rapid access to the South East catchment and the UK’s wider distribution network. The freehold property comprises seven units totalling approximately 89,000 sq ft. Five of the seven units have lease expiries within 12 months, offering Orchard Street the ability to grow rental income in the short-term and materially improve the sustainability credentials of the estate in line with the Fund’s Impact objectives.

Orchard Street intends to undertake low embodied carbon refurbishments, install solar PV panels and EV charging hubs, electrify all units across the estate, and improve the EPCs to A and A+ ratings from the current C to E ratings. Orchard Street will also improve the air quality and thermal efficiency of the units’ offices, enhance on-site biodiversity, and provide a local apprenticeship programme for each refurbishment.

The acquisition follows the first close of Orchard Street’s Impact Fund in November last year, with cornerstone investment from Brunel Pension Partnership, one of the UK’s Local Government Pension Scheme Pools. The Fund‘s capital also includes co-investment from Orchard Street’s partners and members of its senior team. The Fund is targeting 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.

Orchard Street has taken a market leading approach by linking 30% of its performance fees to the achievement of the Fund’s specific impact objectives, thereby aligning itself directly not only to financial outcomes but also to important environmental and social goals. These objectives will also be subject to ongoing independent impact verification from third party assurer BlueMark.

Barney Rowe, Portfolio Manager of the Impact Fund at Orchard Street Investment Management, commented: “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, Associate at Orchard Street Investment Management, commented: “We are delighted to have concluded our acquisition of Euroway Trade Park in Aylesford. The property’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.”

Orchard Street was advised on the acquisition by M1, whilst the seller was advised by Knight Frank.