Start-up firm Mount Street Capital is seeking to raise up to £125 million (€136 million; $200 million) of equity for an investment club to buy light industrial assets located jn and around Greater London.
Reflecting the difficulty of raising closed end funds at the moment, the Greater London Industrial Partnership is structured as an ‘investment club’ with what it says has a greater GP,LP alignment than most traditional closed end structures.
According to Mount Street – which has hired Richard Ellis as its fund placement agent – London’s size and population combined with undersupply of industrial property and little or no development pipeline makes industrial assets in Greater London attractive to buy.
The team includes chairman, Doug Gardner, who is a former chairman and chief executive of public British industrial property company, Brixton. He was also co-founder and chairman of Halverton REIM, which has since changed its name to GPT Halverton.
Mount Street’s chief executive is Bill Sexton, who co-founded Halverton REIM with Gardner and was the company’s managing director.
John Macdonald-Brown, who formerly managed funds at British industrial company Ashtenne is the fund manager.
The other key figure is Lynn Gilbert, a director, who was managing director and head of real estate for Europe, the Middle East and North Africa at Barclays Capital between 2004 and 2008. Prior to that, Gilbert was head of European CMBS origination at Morgan Stanley.
Part of the reason why light industrial assets are attractive is because of a 36 percent reduction in total industrial floor area between 1984 and 2008 in London, said the firm.
Local authorities, for example, have been allowing light industrial units to be converted into residential properties. Clearing land for the London 2012 Olympics has reduced industrial floor area by a further 3 million square feet.
In addition, what is left of light industrial stock is mostly in need of improvement.
A brochure for the Greater London Industrial Partnership suggests it will make “selective acquisitions” of well located multi-let estates with limited voids.
The exit strategy could involve either individual asset disposals, portfolio sales, or an IPO. It wants to build a portfolio of around £250 million, suggesting 50 percent leverage.