November 22, 2014
The Saudi Arabian co-owner of the Pinnacle, EC2, is launching a £100m regional property venture on the eve of the Pinnacle site’s sale.
Jeddah-based wealth manager Sedco Capital has committed £100m to invest in UK offices and industrial assets over the next 12 months through asset manager Palmer Capital.
After expected leveraging of 50-60% and pending the success of the venture, invested funds could expand to as much as £300m in the medium term as Sedco eyes recovering regional markets.
The sharia-compliant firm has seeded the venture with the £28.2m purchase of a 558,000 sq ft multi-let industrial estate in Milton Keynes.
It will continue to target high-yielding assets in the £20m-£50m range, predominantly outside London.
Sedco originated as a large family office but has since diversified into third-party fund management, and intends to capitalise as the UK property recovery spills out from London.
Its latest buy, the Blakelands industrial estate, was bought from clients of Cornerstone Real Estate Advisers at an 8% net initial yield. Tenants include Warburtons and Nikon, with a current void rate of around 15%.
The venture comes as Sedco, Wafra and Arab Investments are in advanced stages of selling the stalled 945ft Pinnacle development to a consortium led by Axa Real Estate Investment Management.
Palmer Capital director Rupert Sheldon said: “We are excited at the prospect of forming a relationship with such an established partner from the Middle East. Handpicking local markets throughout the UK through our established local platform should help ensure superior returns for the mandate over an extended period.”
Palmer was selected as preferred manager in a process run by Townsend Group.
Strutt & Parker acted for the Sedco venture; JLL acted for Cornerstone.
Author: Chris Berkin, Estates Gazette