Orchard St and GIC plan new Situations

Orchard Street Investment Management and GIC Real Estate are launching a second fund to buy assets to improve through active management.

Special Situations Fund II will take on debt with up to 65% loan-to-value levels and have firepower of at least £200m.

The first fund, set up in 2008, bought £130m-worth of property and runs to 2015. Royal Bank of Scotland provided a loan facility.

Orchard Street IM chairman Chris Bartram said: “I am pleased GIC has decided to go again. The time is right for the same arrangement and business plan. Last time we waited for 12 months before starting to buy.”

Bartram said Fund II would target similar stock, including office refurbishments in central London in the City, Mid Town and West End, shopping centres and retail parks. The fund will make 15 investments of £15m-£50m each in the next two years.

Bartram said Fund 1’s returns were “higher than we anticipated; well into double figures”. One investment, 60 Cannon Street, EC4, was sold last summer. It was geared at 65% and investors are thought to have made around a £10m profit.