GIC is backing a real estate fund targeting special situations in the UK.
Singapore鈥檚 sovereign wealth fund is the principal investor in Orchard Street Investment Management鈥檚 third Special Situations Fund, which will have 拢150m to invest, including 50% leverage.
It is the third time GIC has invested with Orchard Street, having backed the firm鈥檚 two previous funds. Orchard Street raised 拢300m from GIC for its first Special Situations Fund .
The new fund is targeting returns between 12% and 15%, most of which will come from income.
John Humberstone, partner at Orchard Street, said the fund was not opportunistic but it would not invest in 鈥渟uper鈥� core assets either.
He said 鈥渢here鈥檚 a lot that remains attractive about UK real estate鈥� despite uncertainty surrounding the country鈥檚 anticipated withdrawal from the European Union.
鈥淲e are in a period of uncertainty, but in the next couple of years, there鈥檚 the likelihood [of] an interesting opportunity to invest in what is fundamentally good property at historically attractive pricing,鈥� Humberstone said.
鈥淲here there is uncertainty there is opportunity.鈥�
Orchard Street will target the office, retail and industrial sectors.
Humberstone said it was hard to say if the aftermath of the UK referendum had affected valuations.
鈥漋aluations have definitely come off since the start of this year and not just since 23 June,鈥� he said.
鈥淚t鈥檚 impossible to say what is Brexit-related and what is [related to investors] just taking a step back.鈥�
MSCI reported today that UK commercial real estate delivered a negative total return (-1.2%) in the third quarter, caused by a 2.4% drop in capital values between July and September.
IPE Real Estate understands that GIC had been divesting non-core real estate assets before the Brexit vote in June.
The November/December 2016 edition of IPE Real Estate will feature an in-depth interview with GIC鈥檚 new real estate CIO Lee Kok Sun
