Corporate overview
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 the responsible and active management of commercial property assets.
We are a trusted adviser and have delivered 18 years of consistent performance for our clients.
Responsible investment is in our DNA. It’s embedded in every aspect of how we operate as a business and how we manage our clients’ capital. We consider the environmental, social and regulatory risks to, and impacts of, all of our assets under management.
Orchard Street is leading the way towards a low-carbon, prosperous future. By combining pioneering sustainability know-how with proven asset management expertise, we create cleaner buildings and better financial outcomes.
We can help you reach your sustainability goals.
Orchard Street – the perfect balance of sustainability and performance.
Responsible real estate investment manager
- Taskforce on Climate-Related Disclosures supporter
- Net Zero Asset Managers’ Initiative signatory
- Better Buildings Partnership Climate Commitment signatory Ț PRI signatory
- First UK refurbished building to receive WELL Gold Shell & Core certification
- First carbon neutral in operation industrial site in west London
Founded in 2004
- We only invest in real estate, €4.4bn in AUM*
- 18 years of driving consistent outperformance for our small stable of world-class investors
- Strong track record executing investment programmes
- About £2bn invested over last seven years and £1bn sold Ț Partners financially aligned with our clients’ interests
- Single investment committee delivers consistency across all mandates through cycles
- Reputation for shrewd stock selection and forensic asset management
* AUM as at 30 September 2022 and represents the aggregate of the net asset values of client assets under management, measured under the individual client’s reporting GAAP (Generally Accepted Accounting Principles), with the addition of undrawn committed capital.
Sector forecasts
INDUSTRIAL: Industrial yields have re-rated from their historic low levels and now look good value in comparison to many other parts of the market. However, the industrial sector is not immune to the coming economic slowdown and we expect rental growth to slow over the coming quarters. Larger logistics properties may be at more risk due to the significant pipeline of speculative developments currently under construction. However, we expect smaller units in urban industrial estates to be less impacted as tenant demand continues to outstrip supply.
OFFICE: The value of office properties is expected to continue to adjust downwards to the higher cost of capital and increased cost of materials. This is constraining the supply of new and newly refurbished properties to the market and is likely to result in a two-tier market with rents of prime properties outperforming older secondary stock. We continue to favour the larger more vibrant urban centres as we expect demand to remain resilient whereas in back office and secondary centres we expect tenant demand to weaken further.
RESIDENTIAL: Higher mortgage rates are likely to impact affordability in the owner-occupied sector and this is expected to provide a further boost in demand for rented stock. We expect renters to become more price sensitive with a number downsizing to accommodate the additional strains on household budgets from rising inflation and falling real wages. It is uncertain whether rental growth can keep pace with rising capitalisation rates but this sector has traditionally been a good hedge against inflation.
RETAIL: Activity in the retail sector is traditionally the most closely correlated to the health of consumers. Retailers face rising costs and falling sales volumes and this is likely to impact negatively on their profitability over the coming quarters. That said, the value of retail investments are yet to fully recover from COVID lockdowns and they are currently priced on relatively attractive yields and cap rates which will provide a degree of insulation against rising yields. We continue to favour supply constrained out of town retail warehouse investments over the majority of town centre locations, although certain larger ‘destination’ town centres are starting to look good value.
OTHER: The diverse range of alternative investments is likely to produce a simi- larly diverse range of outcomes. We expect long leased assets to see a re-rating of yields in response to sharply higher Gilt rates. There is expected to be downward pressure on discretionary leisure spending which could adversely affect trading for a number of hospitality businesses not least the struggling cinema sector but also big ticket items like car retailers. Our top pick is the purpose built student accommodation sector which has strong domestic and international demographic tailwinds, limited supply and contra cyclical tendencies.
Investment principles & strategy
Orchard Street believes that investment in relevant locations with innovative asset management plans is key to creating sustainable income which is key when approximately 75% of total return has come from income over the longer term. The firm’s core beliefs as a real estate manager are that:
- Responsible investing must be embedded within the acquisitions, develop- ment and refurbishment procedures to enhance the long-term value of clients’ real estate portfolios;
- Pro-active asset management creates outperformance;
- Disciplined investment decisions are key to performance;
- A reputation for quick and reliable execution adds value;
- Experience counts;
- Smaller highly focused teams outperform larger firms;
- Communication is critical;
- Maintenance of a strong control environment is fundamental to client needs;
- Location is key; and
- Multi-let assets with multiple business plans generate stronger returns with a lower risk profile.
Performance verification
Orchard Street has consistently outperformed over three, five and 10 year periods against the MSCI UK Quarterly Property index. The performance shown below is a composite track record of Orchard Street core/core-plus client mandates that are benchmarked against MSCI.
COMPLIANCE STATEMENT
This information is provided for use by quali- fied institutional investors and their advisors only. Further information is available on request or on our website.
Whilst Orchard Street Investment Management LLP is not regulated, its wholly owned subsidiary, Orchard Street Investment Advisers Ltd. is authorised and regulated by the Financial Conduct Authority of the UK (FRN 461061).
