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Orchard Street teams up with GIC for third fund

The London-based commercial property firm has teamed up with Singaporean wealth fund GIC for the third time and will begin the acquisition process immediately with a focus on logistics, retail and office assets. 

Orchard Street Investment Management, the London-based commercial property firm, has closed its third real estate vehicle after receiving a £75 million ($93.4 million; €84.2 million) commitment from Singaporean sovereign wealth fund GIC.

Orchard Street UK Special Situations III is the firm’s third real estate investment vehicle and will focus on UK commercial property, including logistics and industrial, retail and office.

The firm did not disclose which UK regions it would be targeting, nor which strategy it would employ on behalf of the fund. However, it is understood the returns will be income-based and the acquired assets will not be subject to speculative development.

The principal investor is GIC, who also invested in Orchard Street’s two previous commercial UK property funds. Orchard Street confirmed it had will not have other investment partners but did confirm it would be co-investing with GIC.

The firm said the vehicle will have an initial £150 million investment capacity, with £75 million coming from GIC and the rest through leverage. The firm did not disclose the performance history of its previous funds.

Philip Gadsden (pictured), managing partner at Orchard Street, said: “For an investor of the scale and reputation of GIC to have selected Orchard Street a third time to launch a fund is a strong endorsement of the strength of our working relationship. We are confident the fund will attract high-quality assets with stable income streams.”

In keeping with its previous vehicles, Fund III, Orchard Street said, will have a targeted return of between 10 percent and 12 percent. It will also be discretionary in nature and will have a 10-year lifespan.

John Humberstone, partner at Orchard Street, said: “There are some UK sectors that have had a distinct shift in pricing. There are lot of interesting opportunities. GIC has been a terrific partner in the past and it’s fantastic that it sees the UK as a sound long-term investment.”

The firm’s two previous vehicles, Orchard Street UK Special Situations I and II, were launched in 2008 and 2012 respectively. Unlike the latest vehicle, the two predecessors were focused solely on retail.

In October 2014, NAB Asset Management, the wealth management arm of National Australia Bank, purchased an almost 75 percent stake in Orchard Street Investment Management, though no sale price was divulged. With the deal, NAB Asset Management added £4 billion to its existing $178 billion of assets under management.

Meanwhile, Orchard Street’s chairman, Chris Bartram, stepped down from his role in January 2015 and became an advisor to the London-based investment management firm. Bartram was a founding partner of Orchard Street when it was established in 2004. Following his departure, Gadsden took on Bartram’s chairman responsibilities.