The Hardington CREST* Opportunity Fund
*Commercial Real Estate Special Transformation Launching Soon!

With Commercial Property across the UK having suffered significant falls in capital values, a huge ‘crest of a wave’ market opportunity is emerging, the scale of which rarely comes round.

We believe this to be a unique moment in the current market cycle and that there are considerable opportunities for savvy investors to acquire key UK property assets at very low valuations.

With the timing of this rare market opportunity, we are announcing the launch of this special Fund this Autumn to do just that. In addition to investors benefiting from Hardington’s many decades of experience and networks, by investing in this exciting opportunity the pooling of capital will also help investors to diversify across multiple assets.

With Commercial Property across the UK having suffered significant falls in capital values, a huge ‘crest of a wave’ market opportunity is emerging, the scale of which rarely comes round.

We believe this to be a unique moment in the current market cycle and that there are considerable opportunities for savvy investors to acquire key UK property assets at very low valuations.

With the timing of this rare market opportunity, we are announcing the launch of this special Fund this Autumn to do just that. In addition to investors benefiting from Hardington’s many decades of experience and networks, by investing in this exciting opportunity the pooling of capital will also help investors to diversify across multiple assets.

About Us

Founded in 2011, Hardington Capital has provided Real Estate Investment Advice and Asset Management for family offices and institutions for many years. In recent months we have purchased commercial real estate assets significantly below where they were valued at just three years ago. We believe that we are approaching a unique moment in time where we will see many more similar assets being acquired in the next 12-18 months, transformed, and sold, creating a significant opportunity for a generational transfer of wealth.

About Us

Founded in 2011, Hardington Capital has provided Real Estate Investment Advice and Asset Management for family offices and institutions for many years. In recent months we have purchased commercial real estate assets significantly below where they were valued at just three years ago. We believe that we are approaching a unique moment in time where we will see many more similar assets being acquired in the next 12-18 months, transformed, and sold, creating a significant opportunity for a generational transfer of wealth.

Why now?

  • Interest rates look set to remain high for the next 12 to 18 months.
  • Commercial funding has all but been withdrawn and the Banks now appear to be tightening their stance regarding covenant breaches.
  • Many existing, occupied offices are facing challenges with their EPC (where minimum building energy performance specs are required before property owners are permitted to let), which also negatively impacts valuation.
  • The opportunity to repurpose well-located commercial properties for residential / alternative use thus creating additional value is clear. Although not as much as pre-Covid, Office space will still be needed, so the opportunity to repurpose some or all of the property for other uses, subject to viability, makes sense.
  • There is still a huge shortage of housing in the UK.
  • In addition to the introduction of further legislation in August 2021 to make ‘permitted development’ even easier, enabling conversion from Commercial to Residential use without the need for planning permission, there has been a further relaxation of planning rules in certain areas.

Why now?

  • Interest rates look set to remain high for the next 12 to 18 months.
  • Commercial funding has all but been withdrawn and the Banks now appear to be tightening their stance regarding covenant breaches.
  • Many existing, occupied offices are facing challenges with their EPC (where minimum building energy performance specs are required before property owners are permitted to let), which also negatively impacts valuation.
  • The opportunity to repurpose well-located commercial properties for residential / alternative use thus creating additional value is clear. Although not as much as pre-Covid, Office space will still be needed, so the opportunity to repurpose some or all of the property for other uses, subject to viability, makes sense.
  • There is still a huge shortage of housing in the UK.
  • In addition to the introduction of further legislation in August 2021 to make ‘permitted development’ even easier, enabling conversion from Commercial to Residential use without the need for planning permission, there has been a further relaxation of planning rules in certain areas.

Why us?

  • Decades of real estate expertise and our extensive networks provides access to many off-market opportunities.
  • Hardington Capital has a strong track record of advising and asset managing commercial real estate, already managing over £100M AUM for family offices and institutions.
  • The Management Team has expertise in both direct client real estate investment advice and asset management as well as funds. Our team members successfully launched and performed with a number of funds, including a $350M Australian dollar Opportunistic UK Residential opportunity fund.
  • We are part of Hardington’s worldwide real estate advisory business with offices in the UK and the Middle East. This provides us with a global perspective on property trends and market gaps, including this huge ‘crest if a wave’ transformation opportunity.
  • We are targeting strategic distressed assets that are already income producing with strong covenants, but these assets also have additional strong value potential through conversion to better uses + ESG impact.
  • We use smart, leading-edge technologies to help transform the built environment. Prudent risk analysis and asset management expertise is at the core of our service.

Why us?

  • Decades of real estate expertise and our extensive networks provides access to many off-market opportunities.
  • Hardington Capital has a strong track record of advising and asset managing commercial real estate, already managing over £100M AUM for family offices and institutions.
  • The Management Team has expertise in both direct client real estate investment advice and asset management as well as funds. Our team members successfully launched and performed with a number of funds, including a $350M Australian dollar Opportunistic UK Residential opportunity fund.
  • We are part of Hardington’s worldwide real estate advisory business with offices in the UK and the Middle East. This provides us with a global perspective on property trends and market gaps, including this huge ‘crest if a wave’ transformation opportunity.
  • We are targeting strategic distressed assets that are already income producing with strong covenants, but these assets also have additional strong value potential through conversion to better uses + ESG impact.
  • We use smart, leading-edge technologies to help transform the built environment. Prudent risk analysis and asset management expertise is at the core of our service.

Other good reasons?

  • Many investors may have already taken profits from other recent market opportunities months ago and are looking for the next great market opportunity.
  • The UK is an attractive, stable place to invest.
  • Exchange rates can be favourable.
  • Be part of transforming buildings and communities.
  • Many investors look for real asset-backed opportunities that also have ESG-linked strategies.
  • As part of converting some of the assets to better EPC standards, we are making a direct positive impact on the environment, work environments and the surrounding community.
  • As part of converting some of the assets to residential, Hardington will:

    – be helping to address the massive shortage of housing in the UK.

    – benefit from strong covenants and revenue from any provision of ‘affordable housing’ (as these would be backed by long term leases to Housing Associations, organisations that benefit from Government funding).

Other good reasons?

  • Many investors may have already taken profits from other recent market opportunities months ago and are looking for the next great market opportunity.
  • The UK is an attractive, stable place to invest.
  • Exchange rates can be favourable.
  • Be part of transforming buildings and communities.
  • Many investors look for real asset-backed opportunities that also have ESG-linked strategies.
  • As part of converting some of the assets to better EPC standards, we are making a direct positive impact on the environment, work environments and the surrounding community.
  • As part of converting some of the assets to residential, Hardington will:

    • 1. be helping to address the massive shortage of housing in the UK.
    • 2. benefit from strong covenants and revenue from any provision of ‘affordable housing’ (as these would be backed by long term leases to Housing Associations, organisations that benefit from Government funding).

What are we planning to do?

  • We will acquire (for cash) distressed buildings with strong lease covenants and add value in 3 key ways:

    1.  1. Use proven technology to transform into greener buildings, generating better places to work.
    2. 2. Asset Management of the lease and other commercial real estate mechanisms.
    3. 3. Convert some into residential and other uses, creating great places to live and then sell at a significant uplift.

Concurrently (where appropriate) we will also amass a build to rent residential portfolio, which will be attractive for other Funds to purchase at an appropriate point in the future.

What are we planning to do?

  • We will acquire (for cash) distressed buildings with strong lease covenants and add value in 3 key ways:

    1.  1. Use proven technology to transform into greener buildings, generating better places to work.
    2. 2. Asset Management of the lease and other commercial real estate mechanisms.
    3. 3. Convert some into residential and other uses, creating great places to live and then sell at a significant uplift.

Concurrently (where appropriate) we will also amass a build to rent residential portfolio, which will be attractive for other Funds to purchase at an appropriate point in the future.

Past example acquisitions and value creation
by Hardington Capital

The following examples illustrate how Hardington Capital purchase very well and then add further value through our ongoing Asset Management process.

Example A

Supermarket, Manchester, UK

Summary

  • Purchased: 2019
  • Purchase Price: £3,950,000
  • Strong covenant (Supermarket)
  • Running Yield: 7.53%
  • Reversionary Yield: 8.42% (June 2026 Fixed Increase)
  • Long let supermarket investment with fixed uplifts (Coop have a lease until 2031 which benefited from fixed increase in 2021 and a further increase in 2026).
  • Strategy to add further value
  • Significant development opportunity:
  • The property site area is 1.7 acres and allows for
    redevelopment to higher use values including a care home and
    residential
  • Potential IRR: 15%+

Example B

Regional HQ Office, Birmingham, UK

Summary

  • Purchased: 2019
  • Purchase Price: £13,500,000
  • Running Yield: 10.65%
  • Projected IRR: 10%+
  • Tenant is well anchored to the location having invested £8m into the office in 2019 and has a UK Government contract that ties them to the site.
  • Tenant is well anchored to the location having invested £8m into the office in 2019 and has a UK Government contract that ties them to the site.
  • The uncapped inflation-linked reviews have prompted the tenant to begin negotiations with us to extend their lease past the 2027 expiry date.

Example C

Logistics Warehouse, Florence, Italy

Summary

  • Purchased: 2022
  • Purchase Price: €3,500,000
  • Running Yield: 10%
  • Reversionary Yield: 7.96% to 10%.
  • Projected IRR: 15%+
  • Tenant is a global glass manufacturer and well anchored to the location. Asset acquired off market from Goldman Sachs via a larger portfolio sale. Continued scope for rental increases due to supply and demand issues and continued success of Northern Italy’s manufacturing region.

Example D

City Office, London, UK

Summary

  • Purchased:2023
  • Purchase Price: £6,750,000
  • Projected Yield: 14%
  • Projected IRR: 20%+
  • Prime Central London location
  • Strategy to add further value
  • Significant development opportunity
  • St Mary Abchurch House provides the opportunity to undertake a comprehensive refurbishment of the existing office accommodation in a unique character building, which has, in recent years, proven itself as a prime City of London location.

Recent acquisitions like this clearly show how the market has already started to present heavily discounted valuations.

With the Hardington CREST Opportunity Fund we see much more of this is to come, especially to those who are in cash and have our expertise and networks.

We will then also go on to add further value by deploying the expert Asset Management skills that Hardington has employed since 2011.

We look forward to keeping you posted with further news of the launch of this exciting Fund.

Past example acquisitions and value creation
by Hardington Capital

The following examples illustrate how Hardington Capital purchase very well and then add further value through our ongoing Asset Management process.

Example A

Supermarket, Manchester, UK

Summary

  • Purchased: 2019
  • Purchase Price: £3,950,000
  • Strong covenant (Supermarket)
  • Running Yield: 7.53%
  • Reversionary Yield: 8.42% (June 2026 Fixed Increase)
  • Long let supermarket investment with fixed uplifts (Coop have a lease until 2031 which benefited from fixed increase in 2021 and a further increase in 2026).
  • Strategy to add further value
  • Significant development opportunity:
  • The property site area is 1.7 acres and allows for
    redevelopment to higher use values including a care home and
    residential
  • Potential IRR: 15%+

Example B

Regional HQ Office, Birmingham, UK

Summary

  • Purchased: 2019
  • Purchase Price: £13,500,000
  • Running Yield: 10.65%
  • Projected IRR: 10%+
  • Tenant is well anchored to the location having invested £8m into the office in 2019 and has a UK Government contract that ties them to the site.
  • Tenant is well anchored to the location having invested £8m into the office in 2019 and has a UK Government contract that ties them to the site.
  • The uncapped inflation-linked reviews have prompted the tenant to begin negotiations with us to extend their lease past the 2027 expiry date.

Example C

Logistics Warehouse, Florence, Italy

Summary

  • Purchased: 2022
  • Purchase Price: €3,500,000
  • Running Yield: 10%
  • Reversionary Yield: 7.96% to 10%.
  • Projected IRR: 15%+
  • Tenant is a global glass manufacturer and well anchored to the location. Asset acquired off market from Goldman Sachs via a larger portfolio sale. Continued scope for rental increases due to supply and demand issues and continued success of Northern Italy’s manufacturing region.

Example D

City Office, London, UK

Summary

  • Purchased:2023
  • Purchase Price: £6,750,000
  • Projected Yield: 14%
  • Projected IRR: 20%+
  • Prime Central London location
  • Strategy to add further value
  • Significant development opportunity
  • St Mary Abchurch House provides the opportunity to undertake a comprehensive refurbishment of the existing office accommodation in a unique character building, which has, in recent years, proven itself as a prime City of London location.

Recent acquisitions like this clearly show how the market has already started to present heavily discounted valuations.

With the Hardington CREST Opportunity Fund we see much more of this is to come, especially to those who are in cash and have our expertise and networks.

We will then also go on to add further value by deploying the expert Asset Management skills that Hardington has employed since 2011.

We look forward to keeping you posted with further news of the launch of this exciting Fund.

Disclaimer
Please note:
The information in this document has been prepared by Hardington Capital LLP for background purposes only, is preliminary in nature and is subject to change.
This content of this document has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (FSMA), this document has not been delivered for registration in any jurisdiction and nor has its content been reviewed by any regulatory authority in any jurisdiction.
This document is exempt from the restriction on financial promotions on the grounds that it is being made available to certain exempt categories of investor as set out in the FSMA (Financial Promotion Order) 2005 (FPO). This document is therefore directed only at recipients who are overseas (outside the UK) or are one of the following:
(i) persons who have professional experience in matters relating to investments (being investment professionals within the meaning of Article 19 of the FPO); or
(ii) persons falling within Article 49(2) (high net worth companies, unincorporated associations etc) of the FPO; The information contained in this document does not constitute

(i) a binding legal agreement;

(ii) legal, regulatory, tax, accounting or other advice;

(iii) an offer to buy or sell securities or investments of any description; or

(iv) an offer to provide investment services or advice to acquire or dispose of any investment or to engage in any other transaction.
This document is issued to the intended recipients by Hardington Capital LLP and should not be relied upon by any other person. It does not constitute an offer to any person in any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained in this document. The information has not been independently verified and will not be updated. The information, including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurances as to future results.
If you are in any doubt about the contents of this document, you should consult a person appropriately authorised who specialises in advising on investments of this kind.