Singapore's GIC teams with Orchard Street for £300m UK fund

As investors position themselves to take advantage of falling commercial property values in the UK, Orchard and Singapore's state-owned investment fund, GIC, are looking to make up to 15 British property investments over the next three years.

UK-based Orchard Street Investment Management has teamed up with the Government of Singapore Investment Corporation to form a £300 million ($605 million, €394 million) special situations fund to invest in UK commercial real estate.

The fund will take advantage of recent UK market weakness by investing in up to 15 assets worth between £15 million and £50 million over the next three years. The fund will have a seven year lifespan and include gearing up to two-thirds of the total value.

GIC has been looking at the UK property market for the past few months. In January it increased its stake in British Land to more than three percent.

“The object is to buy assets with active management potential for improvement,” said Orchard Street chairman Chris Bartram. “This style of investment is an area of particular experience and expertise for Orchard Street, and which we believe has the potential to generate higher than normal market returns.”

UK opportunity funds are attracting increased attention due to UK market weakness. In January UK investment bank Evans Randall became one of the first groups to launch an opportunity fund taking advantage of falling commercial property values and the need by some funds to sell off assets quickly. The firm is creating a vehicle 50/50-owned with Bank of Scotland capable of acquiring £1 billion (€1.3 billion; $1.9 billion) of real estate.