We are a leading commercial property investment manager, focused on the UK market and acting on behalf of institutional clients worldwide to advise on investing in and the active management of UK commercial property assets.
Established in 2004, we have a consistent track record of investment outperformance for each of our funds. Orchard Street had assets under discretionary management of €5.12bn as at 30 April 2019.
We possess the full range of skills and key networks to enable us to provide a full service property investment management offer, whilst retaining a boutique approach to client relationships. Our focus is on identifying the best properties, creating the right transaction structures and using a disciplined investment approach. Our partners have a wide breadth and depth of experience built across the industry over many years and their hands-on approach is integral to the success of our investment approach.
INDUSTRIAL: The industrial sector continues to undergo a renaissance in large part due to the growth of internet retailing. This is driving rent up particularly for smaller and medium sized properties in and around the larger urban areas. We think the broader trend of strong outperformance of this sector has another two to three years to run but we are increasingly selective in our acquisition strategy, avoiding properties which we see as ex-growth or over-priced, instead focusing on those where there is sustainable tenant demand, limited competition and the opportunity to push rents forward through active asset management.
OFFICE: Brexit and its impact on the UK economy is the fulcrum around which the performance of UK offices hinges. A hard Brexit is expected to hit the whole of the UK economy whereas a soft Brexit is likely to only restrain growth. Offices in London and the SE are more exposed to international occupiers, and whilst some will undoubtedly relocate some or all of their functions, the loss of these functions could conceivably be counteracted by growth in other areas. Outside of London our activity is focused on investments in the core office areas of the larger cities where we believe the focus of occupier activity is increasingly consolidating. When appraising office investments, we believe the impact of depreciation and capital expenditure is a crucial factor in determining relative performance.
RESIDENTIAL: Residential investment is re-emerging as an institutional asset class after a prolonged hiatus as owner occupation has become both increasingly out of reach of many and renting the preferred choice for others. Demand remains focused on the larger urban areas with proximity to public transport a key factor. The stock of large scale is due to increase substantially over the next few years as a number of larger-scale developments complete. We continue to appraise investments on a case-by-case basis, including where there is an option to add value through change of use, but have yet to find a compelling investment proposition which delivers an appropriate risk return for our clients.
RETAIL: The UK has too much retail space in the wrong locations and this is expected to depress the performance of this sector for some time to come. However, not all retail property is bad, rather the retail sector has become polarised by changes in consumer spending patterns. We see only limited opportunity to deliver acceptable performance in smaller and medium sized town centres whereas we see dominant out of town ‘value’ bulky goods retail as offering attractive and sustainable income streams.
OTHER: Outside of the main commercial property sectors we see opportunities for a diverse range of investors from both longer term inflation linked income leases on hotels and care homes but also short term opportunities such as direct let student accommodation. However, each asset should be considered on its individual merits with a particular focus on sustainability of the underlying operational business and the residual value of the asset.
Investment principles & strategy
Income is the key to outperformance in property investment, with approximately 75% of total return coming from income over the longer term. Our beliefs are that:
- Pro-active asset management creates consistent outperformance
- Disciplined investment decisions are key to performance
- Reputation for quick and reliable execution adds value
- Experience counts – executive partners average 20 years-plus experience in the sector
- Smaller highly focused teams outperform larger firms
- Communication is critical
Strategic corporate development
Since inception in 2004 Orchard Street has built a reputation as a trusted adviser to a small number of world class institutional investors. We have a demonstrable record for consistent outperformance based on disciplined stock selection and a structured, relentless approach to asset management.
In October 2014 NAB Asset Management became a partner with a majority ownership interest in Orchard Street. Executive partners own 25% of the business.
We continue to grow the business at a pace that preserves our real estate performance track record for all our clients and retain our focus on deep, long term relationships with our client base.
OSIM has consistently outperformed over three, five and 10 year periods against the MSCI UK Annual Property index. The performance shown above is a composite track record of OSIM core/core-plus client mandates that are benchmarked against MSCI.
Our performance over 10 years is strong, having delivered average outperformance of 130bps p.a.
This information is provided for use by qualified institutional investors and their advisors only. Further information is available on request. Orchard Street is authorized and regulated by the Financial Conduct Authority of the UK, via its subsidiary Orchard Street Investment Advisors Ltd.