Elite Partners on expansion path

Singapore-based private equity firm, Elite Partners Capital, acquired a portfolio of 97 commercial properties across the UK last November. The portfolio, worth £282.15 million ($492.82 million), was purchased from Telereal Trillium, one of the largest privately-owned property firms in the UK.

All except one of the 97 properties in theportfolio have freehold tenures. The 97th property has a 250-year lease. About 85% of the office buildings are located in town centres and have a combined floor area of 2.6 million sq ft. About 99.4% of the rental income in the portfolio is secured against the covenant of the UK Secretary of State for Communities and Local Government. The remaining 0.6% in the portfolio is leased to shops, F&B and other amenities that serve the office users.

The portfolio is currently let to the UK’s largest government department, namely the Department for Work and Pensions. The lease is for 10 years with effect from April 1, 2018. “We were exploring logistics properties in Europe when we chanced upon this portfolio of assets in the UK,” says Victor Song, CEO and managing director of Elite Partners Capital. “I thought these UK office assets would provide sustainable returns to our investors given the good covenant strength, predominantly freehold tenure of the portfolio and the fact that the properties are diversified across the UK – from London, to East and West Midlands, the South and even to Glasgow, Scotland in the north.”

Land banking, asset enhancement
About 36% of the portfolio by income is situated in London, the South and the Midlands. Another 26% of the portfolio is located in Scotland, including a major asset in Glasgow City Centre. The portfolio has cash-on-cash returns of about 11% and running yield of 8.3% per annum. It has potential for further gains with built-in rent uplifts in the range of 1% to 5%, asset enhancement and redevelopment. Some of the buildings in the portfolio sit on huge plots of land that have yet to be fully developed, while others are located near public transport facilities such as train stations or bus interchange, notes Song. The portfolio therefore presents opportunities for land banking, asset enhancements and hence, capital gains, he adds. The acquisition is the first significant transaction by Elite Partners’ Singapore-domiciled Elite UK Commercial Fund, which focuses on UK commercial real estate. To date, the fund has raised £120 million ($216 million) in equity and mezzanine funding from more than a dozen prominent institutional investors, family offices and ultra-high net worth individuals. The fund life is five years.

No doubt, the uncertainty around Brexit is disconcerting to investors. However, Song says, “Short-term volatility surrounding the Brexit develoments are within our expectations.” He adds, “We do see interesting opportunities and entry points in times like this. We maintain a long-term view in real estate investments and we do conduct fundamental and in-depth analysis on potential enhancement opportunities in our investments.”

REIT ambitions
Song’s intention is to “bulk up” by purchasing more commercial properties in the UK tofurther increase the assets under management (AUM) to about $700 million to $800 million. “We have a handful of potential acquisition targets in the pipeline, with deal size varying between £130 million and £180 million and we are in active discussions with the vendors,” says Song. “We are making a site visit to two of those in the pipeline this week before making a firm offer.” The group is also exploring the possibility of setting up a REIT. If successful, it will be the first UK commercial REIT to be listed on the Singapore Exchange.

Song is no stranger to setting up REITs. He was the head of asset management and investment director at Viva Industrial Trust (VIT) before its merger with ESR-REIT last April to become the fourth largest Singapore-listed industrial REIT with $3 billion in assets. VIT was subsequently delisted in October 2018.

While at VIT, he formulated the business plans for the REIT’s properties and was involved in acquisitions and divestments. Prior to joining VIT, he was the sole proprietor of VS Real Estate, and was responsible for managing real estate-related contracts. Before that, Song was in the investment team of Cambridge Industrial Trust Management, where he was also involved in investment strategies.

Song co-founded Elite Partners with Chiew Chuanjin and Charles Hoon in 2017. Chiew is executive director and CFO of the firm, while Hoon is executive director and COO. The team has a total of nine staff as at end-2018, and is expanding to “15 to 20” this year.

Opportunities in Belt and Road Initiative
Besides the Elite UK Commercial Fund, Elite Partners is exploring the launch of a European Logistics Fund which will invest in assets that will benefit from the Belt and Road Initiative. Proposed by China in 2017, the Belt and Road Initiative will see the development of transportation hubs, new railway routes and ports across parts of Asia and Europe. The rationale is that it will enhance connectivity in Eurasia, and boost trade and investments in infrastructure construction.

The fund will acquire logistics properties, warehouses and distribution centres around Europe, he adds. “We have already started buying assets for this portfolio since March 2018.”

Investments include five plots of land in Poland, which have been amalgamated, with plans to build two logistics blocks on the site. The intention is to develop and also to purchase existing assets with ready yields, explains Song. The group raised seed funding of €30 million ($46.4 million) which has already been invested, and it intends to grow the fund’s portfolio size to €400 million to €500 million range, he adds.

Alternative investments
Elite Partners has also launched the Elite InNorvate Growth Fund, which works closely with Norwegian government agencies to identify and co-invest in promising start-up companies in Norway. The fund will focus on companies involved in sectors such as clean energy, ocean space, healthcare and welfare, smart cities, bio-economy, creative industries and tourism. Emily Goh, Elite Partners’ portfolio director is overseeing the Elite InNorvate Growth Fund.

Another fund by Elite Partners is the Excelon Structured Trade Income Fund that invests in short-term trade financing and arbitrage opportunities, particularly in metals traded on the London Metal Exchange (LME). Elite Partners acted as sub-investment manager of the fund. “We have been gradually returning capital and profits to the investors upon maturity of our investments,” says Goh.

“The idea is to focus on alternative investments, and to create opportunities for investors who want to diversify their portfolios,” says Elite Partners’ CFO, Chiew. “We try to provide a range of products with different risk profiles for investors who want to gain exposure to non-traditional assets.”

Song concurs. “Our expertise is in real estate and alternative investments,” he adds. “We are able to identify opportunities for investors and structure products to provide a secured return on their investments.”

In Singapore, Elite Partners is exploring the possibility of investing in a logistics hub in Jurong, which will be a halal food hub. According to Song, the group is looking for a suitable site with a 30-year lease from industrial landlord JTC Corp.

Today, Elite Partners is managing about $560 million of AUM. The intention is to grow it to about $1 billion by end of the year, says Song

 

DISCLAIMER

ELITE Partners Capital Pte. Ltd. (Company Registration No. 201705474C) operates as a Registered Fund Management Company [“RFMCs”], with the Monetary Authority of Singapore (MAS) under the Securities and Futures (Licensing and Conduct of Business) Regulations [“SF(LCB)R”].

This website contains information about Elite Partners Capital Pte. Ltd. (“ELITE”) and the products and/or funds offered by ELITE. This website is not directed to any person in any jurisdiction where the publication or availability of the ELITE website is prohibited. The information provided on the ELITE website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country that would subject ELITE or its affiliates to any registration requirement within such jurisdiction or country.

While ELITE takes care to ensure that the information on this website is accurate and up to date at the time of publishing, the information on this website is provided “as is” without any warranty of any kind. ELITE shall not be liable for any losses or damages relating to adequacy, accuracy or completeness of any information on this website or the use of such information. The information on this website is being provided strictly for informational purposes only and does not constitute investment advice. All information contained herein may be changed or amended without prior notice. In addition, ELITE is not responsible for any errors or omissions relating to information provided by any third party.

Terms of Access
By continuing to access this Website:

  1. You represent and warrant to ELITE that you are an Accredited Investor (as defined in section 4(A) of the SFA of the SFA), and are accessing information published on this Website for your personal information purposes only.
  2. You acknowledge that information published on this Website:
    1. is for informational purposes only and is not understood or construed by you as an offer or solicitation by ELITE to you to invest in any investments funds managed by ELITE or investment opportunities made available via ELITE for investment; and
    2. does not constitute any investment advice by ELITE to you in respect of such investment funds or investment opportunities.

Disclaimer
By continuing to access this Website, you are also deemed to have agreed to and to observe other terms and conditions of use of this Website set out in the section entitled “General” in the Terms of Use of this Website and you further acknowledge that:

  1. Any offer or solicitation in respect of any such investment funds or opportunities shall be made only with reference to legally binding investment documentation to be distributed to you at your request together with information memorandum (collectively “Definitive Documentation”) relating to such investment funds or opportunities, all of which must be read by you in their entirety; and
  2. No offer to invest in any such investment funds or opportunities is intended to be made to you, or be capable of acceptance by you, prior to your receipt and execution of Definitive Documentation relating thereto.

GENERAL

  1. REPRESENTATIONS AND WARRANTIES
    1. You represent and warrant to us that:
      1. you will enter into these terms as principal;
      2. you are an Accredited Investor (as defined in section 4(A) of the SFA of the SFA);
      3. you are not a bankrupt;
      4. you will not access the Site to use the Services if the laws of your jurisdiction prohibit you from doing so in accordance with these Terms;
      5. you will not be using the Site for any illegal activity, including but not limited to, money laundering and the financing of terrorism;
      6. you are a resident of a jurisdiction in which the Services are legally allowed;
      7. any information contained in or provided by you is true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated; and
    2. The representations and warranties made in clause 1 are deemed to be made by you by reference to the facts and circumstances.
    3. You acknowledge that you have make these representations and warranties with the intention of inducing us to enter into these Terms and that we have entered into these Terms on the basis of and in full reliance on such representations and warranties.
  2. DISCLOSURE OF INFORMATION
    1. We have the right (and you authorise us) to:
      1. collect, use and disclose your information in the manner and for the purposes as described in the PDPA and the Privacy Policy;
      2. disclose your information to any of our other offices or related company, whether in Singapore or not; and
      3. disclose any information relating to you, including information to enable us to perform our obligations under these Terms, to whom such disclosure is considered necessary, and required by any applicable law (domestic or foreign).
    2. Clause 2 is not, and shall not be deemed to constitute, an express or implied agreement between us for a higher standard of confidentiality than that prescribed in any applicable law (domestic or foreign).
  3. STORAGE OF INFORMATION
    1. Information we collect may be stored in servers in Singapore or other countries that may have different levels of privacy protection. To the extent allowed by any applicable law (domestic or foreign), you consent to such transfer and processing of the information in such other countries.
    2. We will use reasonable measures and to the extent permitted by applicable law (domestic or foreign), to maintain the security of all information collected against any loss, theft, unauthorised use, disclosure, or modification and to ensure the integrity of the information.
    3. Clause 3 is not, and shall not be deemed to constitute, an express or implied agreement between us for a higher standard of security measure than that prescribed in any applicable law (domestic or foreign).
  4. SEVERABILITY
    1. If any of these Terms shall be deemed invalid, unlawful or unenforceable in any respect under any applicable law (domestic or foreign), the validity, legality and enforceability of the remaining provisions of these Terms shall not in any way be affected or impaired.
  5. INDEMNITY
    1. You agree to indemnify us for and keep us indemnified against all liabilities, obligations, actions, suits, claims, demands, losses and damages which we may incur or suffer, and all costs, charges and expenses of reasonable amount and reasonably incurred by us, arising from (a) your use of the Services, (b) any breach by you of these Terms, (c) the exercise of our rights under these Terms us, (d) acting or relying on instructions, (e) any claim by any third party against us arising from providing the Services to you, and (f) your violation of any applicable law (domestic or foreign).
  6. HYPERLINKS
    1. When you access certain links on our website you may leave our website. ELITE has not reviewed any of the websites linked to our website and does not endorse or accept any responsibility for the content of such websites nor the products, services or other items offered through these websites.
  7. LIMTATION OF LIABILITY
    1. ELITE or its affiliates, or any of their respective directors, officers, employees or agents shall not liable for any event of Force Majeure, any virus or other harmful component affecting the website or any server that operates it, any interception of data or communications in connection with the public nature of the internet, any problems or technical malfunction of any telephone network or lines, computer online systems, servers or providers, computer equipment, software failure of any email or entry to be received on account of technical problems or traffic congestion on the Internet, telephone lines or at any website, or any combination thereof, including any loss of opportunities or profit arising from any time delay, system disruption or interruption, transmission blackout, delayed transmission or any incorrect data transmission, or any injury or damage to the computer or other electronic devices or property of any person accessing their website or any other person related to or resulting from accessing this website or downloading any materials from this website.
  8. GOVERNING LAW AND ENFORCEMENT
    1. These Terms and any non-contractual obligations arising out of or in connection with these Terms will be governed by and construed in accordance with laws of Singapore.
    2. All disputes, controversies or differences including any questions regarding its existence, validity or termination arising out of or in connection with these Terms (the “Dispute”) shall be referred to and finally resolved by arbitration administered by an arbitrator to be agreed between the parties to these Terms or failing agreement, to a person to be appointed as arbitrator by the President or Vice President for the time being of the Singapore Institute of Arbitrators upon an application therefor made by either party. The arbitration shall be conducted in accordance with the Rules of Arbitration of the Singapore Institute of Arbitrators for the time being in force.
    3. Parties agree that prior to the commencement of arbitration, they will attempt in good faith to resolve the Dispute through mediation in accordance with the Singapore Mediation Centre’s Mediation Procedure in force for the time being. A party who receives a notice for mediation from the other party shall consent and participate in the mediation process or shall be deemed to be in breach of these Terms.