Industrial developer announces £100m fund targeted at multi-let sector

Warrington-based industrial developer and asset manager Chancerygate has partnered with property-focused investment company JR Capital to raise a £100m fund for investment in the UK multi-let industrial sector.

The first close of the fund has raised £25m of equity from London-based JR Capital’s Middle East-based private and institutional client base, giving Chancerygate an immediate £50m to deploy, including within the North West.

Further closes are anticipated shortly. The fund has a five-year life and will target multi-let industrial investments across the UK in lot sizes of £5m to £15m.

Chancerygate and JR Capital have also announced the fund’s first acquisition.

Brunswick Park is a nine-unit industrial and warehouse development in Newcastle-upon-Tyne totalling 71,700 sq ft, which was purchased for £3.3m.

The fund will invest in improvements across the property and generate new income by bringing the three acres of vacant land into use as open storage.

Chancerygate’s Warrrington-based asset manager, David Tyson, said: “A key aspect of our growth strategy is to further increase the size of our asset management business.

“Our partnership with JR Capital and the funds raised will play a significant role in achieving that objective, so we are delighted to have achieved a first close in a challenging fund-raising environment.

“The fund will allow us to add to the mandates our asset management team already has from the likes of Bridges Fund Management, Carlisle City Council and Patrizia.”

The strategy of the fund is to assemble a geographically diversified portfolio of assets across the UK, generate secure income from a highly diversified tenant base and add value through active asset management. Both JR Capital and Chancerygate are co-investing into the new fund.

JR Capital managing director, John Collier-Wright, said: “We believe the multi-let industrial sector is still undervalued.

“It offers relatively high yielding and well diversified income which is attractive in the current environment. The sector is one of very few which has real potential for growth over the short to medium term, underpinned by key macro fundamentals.

“There is a lack of supply of small to mid-sized industrial units across the UK, coupled with an ever-increasing demand from a better-quality tenant base. The shift to online commerce and the need for storage and last-mile logistics space will inevitably continue to drive demand and rents.”

He added: “Our clients continue to have a strong appetite for UK commercial property, and they see the defensive nature of this asset class as a hedge against the continued uncertainty surrounding Brexit.”

At present, Chancerygate oversees £220m of assets nationwide across more than 4.9m sq ft of commercial space in 355 industrial, retail, office and leisure units.

In April the company announced the appointment of asset manager, George Jerram, who joined from Square Metre Asset Management.

Chancerygate director and head of asset management, Rory Finnan, added: “The investment case for the multi-let industrial sector remains compelling with supply diminishing and demand remaining strong, despite the challenges of Brexit.

“Achieving £25m at first close on a £100m fund is testament to this and also reflects our track record as a successful industrial developer and asset manager.”

JR Capital is an FCA-registered multi-family office business with a focus on UK and European real estate.

It provides a platform for its Middle East-based private and institutional clients to co-invest into both UK and European real estate. Founded in 2005 by John Collier-Wright it has concluded more than £2bn of transactions across all sectors.

Michael Ferris, head of investment at JR Capital, said: “With significant increases in online shopping, we expect this structural shift in the way we consume to continue to have an impact on demand for regional light industrial, warehousing and distribution assets over the next cycle.

“We are also attracted to the granular nature of the tenant base and the fact it’s the cheapest commercial space on the market, both of which in our view make it a highly defensive strategy.

“Chancerygate has an outstanding reputation within the industrial property sector and we are looking forward to working with them on this exciting new venture.”

While Chancerygate’s asset management business is set for growth, its industrial development arm is also expanding rapidly.

This year the business will triple its completed developments compared with the previous year, delivering more than one million sq ft across 13 schemes compared with 340,000 sq ft in 2018.

Founded in 1995, Chancerygate is the UK’s largest multi-unit developer with developments ranging from Livingston, West Lothian, to Poole, Dorset.

In addition to its Warrington base, Chancerygate also has offices in London, Birmingham and Milton Keynes.