Investing in Commercial Property
Commercial property offers the opportunity to generate fixed income returns and capital growth, which is relatively uncorrelated with quoted equities and bonds.
Commercial property investment returns
We target annual returns, net of costs, of 10-15% over a period of up to five years. This often includes an annual fixed income payment of c5%.
Our investment criteria for commercial property
We focus on assets with a purchase value of up to £40m UK wide, from hotels to strategically located logistics hubs, commercial premises in up-and-coming areas or offices in prime urban hotspots. Assets generally have strong tenant covenants and long leases for secure income, as well as the potential for capital growth.
Commercial property investment strategy
We source property assets which can produce long-term fixed income returns. Then we focus on ways to add value to accelerate capital growth, for example by upgrading or expanding the premises or acquiring value-adding extras.
In addition, we are able to take an opportunistic approach to acquire and turnaround distressed assets or where there is potential to restructure or reposition an asset.
In some cases, we also ‘forward fund’ the development process. A developer agrees to provide a site with planning consent and to build the property, with signed agreements for leases with tenants in place, while our clients provide the capital to acquire land and fund construction works at a guaranteed maximum price.
Case study: PureGym property doubles clients' money
Our clients invested in a newly constructed property in the Nine Elms area of London’s South Bank in April 2013. The relocation of the American Embassy to the area had driven regeneration and development.
The 19,800 square foot property, on the ground floor of a residential and commercial development was let to PureGym, the market-leading low cost gym operator.
In October 2017 the property was sold for £4.35m, a significant uplift on the purchase price of £2.55m.
This commercial property investment generated a net 18% internal rate of return (IRR) for our clients (2x their original investment), significantly exceeding original returns forecasts.
View Commercial Property portfolio