Power Letters 2024: Regional investors retain interest in UK real estate

The past year was a transformative one that signalled new beginnings and strengthened connections, particularly with our Middle Eastern investors.

Our journey through 2023 was not just about growth and transition, but also about deepening our global relationships and reinforcing our commitment to the UK real estate sector.

In 2023, Greenridge marked a monumental shift, transitioning from a deal-by-deal manager to a robust fund manager. This strategic evolution was driven by the need to have ‘dry powder’ or cash readily available, enabling us to swiftly execute deals, particularly in scenarios involving distressed sellers who are often pressed for time. This pivotal change was underscored by the launch of Greenridge Opportunities LP (GO), a GBP 150m commercial real estate fund.

Our transition resonated deeply with our investors, especially in the Middle East, where over 80 per cent of the GO fund’s commitments originated. This reflects the strong trust and confidence placed in the UK market and Greenridge’s strategic approach by Middle Eastern investors.

The current financial climate has made debt financing more challenging, leading to reduced deal flow, lower asset prices, and thus, more lucrative investment opportunities.

Navigating challenges

Despite a challenging macro environment in 2023, Greenridge accomplished an unprecedented level of capital raising, reinforcing our capability to identify and seize market opportunities. Our investment acumen enabled us to procure premium assets at significant discounts, thereby enhancing our robust and diverse portfolio.

The initial capital raise for the GO fund was notably oversubscribed, mirroring the high investor confidence in our organisation amidst a tough economic landscape.

UK commercial real estate: Resilience and anticipated recovery

Last year, the UK commercial real estate sector confronted several challenges. Sellers with high leverage faced heightened difficulties due to rising interest rates and economic pressures. Secondly, the sector saw challenges for funds suffering from large outflows of capital, affecting their ability to sustain and manage their real estate investments effectively.

Despite these headwinds, we observed a growing demand for green and ESG-compliant assets. These high-quality properties, although limited in supply, have performed well. Looking ahead, we anticipate a market recovery starting in late 2024, an opportunity that Greenridge is strategically positioned to capitalise on.

 Setting the stage for expansion in 2024

The successful launch and performance of the GO fund have set the stage for our expansion. We are immensely grateful for the trust and support of our investors, particularly from the Middle East, and we are focused on further solidifying these relationships while exploring new avenues for growth and innovation in the real estate sector.

Our goal is not just to drive progress but to create sustainable value for our stakeholders and partners across the globe. We are excited about the opportunities that lie ahead and are committed to navigating them with the same diligence and foresight that have been the hallmark of our three-decade journey.

The writers are the co-founders of Greenridge Investment Management.