Recognising the impact of London’s growing digital economy and its need for connectivity, we moved into the data centre market in 2012, buying Sovereign House in Docklands. It gave us the chance to buy 15-year income at a yield in excess of 7%, while at the same time gaining exposure to a developing real estate sub-class.

A second data centre acquisition followed in Amsterdam in March 2013.

Taking advantage of the prevailing low interest rate environment we were able to refinance Sovereign House in late 2015, achieving a substantial return of equity to investors, while enhancing the net cash yield to equity to 10% per annum. 

Despite our historic focus on London, we deploy our asset management and financing overseas as well, if we see the opportunity to add value.

We bought Königsbau Passagen, a prime retail and office complex in Stuttgart, Germany, soon after it was opened in 2006. The city centre asset provides 26,000 square metres of retail and 18,000 square metres of prime office space. In the ensuing years we undertook intensive asset management to increase the annual rent roll by €1.8m. This has been delivered through a combination of increased unit rental rates, achieving full occupation of the offices and a €10 million redevelopment of the second and third floors to create a high quality food lounge that has driven footfall and rental levels further. Königsbau Passagen has become established as one of Stuttgart’s major shopping destinations, with a premium reputation and a broad mix of tenants which produces a robust and sustainable cashflow.

Property cycles also present opportunities and we complement our value-add strategies with market-driven opportunism when market dynamics are right. We always have a clear strategy for every asset, but we also track capital flows and read investment cycles to time acquisitions and exits effectively.

As an example, we bought Milton Gate in the City of London in June 2009 for £127m, at a low point in the London office investment cycle and a time of historic low liquidity. The acquisition of this seven-storey building, which is let in its entirety to law firm Addleshaw Goddard, effectively marked the bottom of the prime City office investment downturn and was acquired at a yield of 7.5%. Our exit in June 2010, at a yield of 6%, provided equity investors with an IRR of 60%.