Spire Ventures, the investment management vehicle run by Faisal Butt, has teamed up with entrepreneur James Caan to back value-add property company QuoinStone Investment Management.
The pair, which teamed up to back 90 North in 2011 and have seen that company grow to a propco with more than $1.5bn (£1.1bn) of asset under management, is looking to deliver the same success with its latest investment.
QuoinStone, established by Tim Struth and Steve Howling, is seeking to build a business with an initial £1bn of assets under management.
It will target multilet offices in London and the big six regional cities within the £10-50m-plus price range.
It will particularly target those areas where office supply has been starved due to the increased use of permitted development rights for office to residential conversion.
“This is very much a peaky time so this is a good time to set something up that has a value-add play and is ready to pounce,” said Butt.
The business has already secured its first mandate, the £100m, 130,000 sq ft multilet Telephone House in Shoreditch, EC2.
Leases are due for renewal in the next four to five years, enabling a potential medium to long-term redevelopment.
Howling, formerly UK portfolio manager at Fidelity, said QuoinStone would be targeting underutilised buildings which it could reposition over a four to eight-year period and then sell on to institutional clients.
The pair believe there is less competition for value-add stock with many investors switching to lower risk, core and long income strategies because of ongoing doubts over Brexit.
They also believe that consolidation among the larger fund managers has created an opportunity for a new entrant.
“We have watched the continued move by institutional investors away from risk and towards long-dated income across sectors,” said Struth.
“We believe that this, combined with the supply imbalance in some markets, has opened up a buying opportunity for value-add stock and provides the perfect climate to take advantage of our experience of repositioning and improving assets, moving them from value-add to core.”
Alongside the backing from Spire and Caan, QuoinStone is seeking further investment from domestic and overseas Asian, Middle Eastern and emerging market buyers. It also plans to co-invest.
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