Orchard Street buys south-east London last-mile estate

Orchard Street Investment Management has bought an “ultra-urban” industrial estate in Charlton, south-east London, on behalf of its £400m impact fund. The investment manager bought the freehold for the last-mile estate for around £21m. The seller was HPPUT, which is part of the Daily Mail & General Trust pensions scheme, according to EG Radius.  The site is located around six miles east of London Bridge and 1.5 miles south-east of Greenwich Peninsula and the O2 retail and leisure destination. It is adjacent to the Charlton Riverside opportunity area, which is targeting the redevelopment of existing industrial space into 7,500 new homes and other alternative uses. Orchard Street said the resulting reduction in industrial stock is expected to enhance rental growth prospects for the property and boost occupier demand during the fund’s ownership. The estate consists of nine fully let facilities, with all of them subject to a lease event in the next three years. The fund intends to undertake low-embodied-carbon refurbishments across the 1980s estate to improve EPCs from B to A+ ratings, electrify units to reduce carbon emissions, install solar panels and air source heat pumps and add EV charging capabilities. Biodiversity net gains are also targeted, and the fund will partner with local institutions to provide an internship and apprenticeship programme focused on skills and training for each planned refurbishment.   Barney Rowe, portfolio manager of the impact fund at Orchard Street Investment Management, said: “The estate won’t be environmentally compliant by the end of the decade without critical decarbonisation works, which we can address through leveraging our asset management expertise. “The strength of its location and its multi-let profile provides us with numerous opportunities to improve its sustainability credentials while importantly allowing us to capture the highly reversionary rents in the near term to generate value on behalf of our investors.” Orchard Street was advised on the acquisition by DTRE; the seller was advised by Gerald Eve. View investment comparables in the Royal Borough of Greenwich >> Photo © Gerald Eve, courtesy of FTI Consulting