By James Whitmore
Grosvenor is backing multi-let industrial property pioneer John Sims in his return to the market through the IO brand he created 26 years ago.
The new investment vehicle, IO Investment LLP, will be run and managed by IO Asset Management, which is owned by Sims and Angus Scott-Brown, a 20-year veteran of Segro, Rockspring Property Investment Management and Rutley Capital Partners.
Sims and Scott-Brown, who are co-investing in the vehicle, will buy multi-let industrial estates and small business parks throughout the UK. They have an initial £35m to invest and will target properties in the £2.5m-to-£4.5m price range.
“Angus and I are delighted to have established this investment vehicle with Grosvenor — we could not wish for better partners to re-establish the IO brand,”
Sims told Property Week.
Sims started IO in 1986 as Industrial Ownership. The IO system of management focuses on close-contact liaison with estate occupiers, flexible occupation and a freedom of choice for occupiers to rent or buy their units.
Between 1990 and 1995 IO had a joint venture with the British Coal pension fund, called CINio, which outperformed the IPD industrial index during this period by 700 basis points — 14% a year, compared with IPD’s 6.9%.
In 2002 Sims floated IO Group as Property Fund Management. He then expanded into Europe, opening offices in France, the Netherlands, Germany, Denmark, Hungary, Poland and the Czech Republic. He sold the company in 2004 to Teesland and left in 2007.
The IO tie-up is part of a “diversification” strategy to invest in companies and vehicles in specialist sectors.
“This involves entrusting our capital to other management teams whom we rate highly in those sectors and geographies not covered by our direct exposure,”
said Grosvenor chief executive Mark Preston.
“Diversification” was one of Preston’s three key aims when he took as chief executive on 1 July 2008. The other two were to increase revenue profit — last year’s 26% leap to £80.8m was helped to a large extent by improved efficiencies in the core London estate — and overhauling Grosvenor Fund Management.
Grosvenor’s new indirect investment division was set up last year and is headed by Chris Taite, who was previously a fund manager at Grosvenor Fund Management. Its £817.2m of assets, which were transferred to it last year, comprise £312.3m of equity invested in shopping centre developer and manager Sonae Sierra and £504.9m of co-investments in funds managed by Grosvenor Fund Management. The investment in IO Investment is the first new investment.
Taite said it was
“a significant first step in realising our indirect investment ambitions. Grosvenor aims for geographic and sector diversification and our exposure to the industrial sector is a notable omission in the UK. John and Angus’s track record of delivery in this area is exceptional and we share their enthusiasm for this new investment vehicle.”
The new indirect investment division is one of three businesses within Grosvenor that was created last year by Preston in his bid to simplify the group structure. The previous five regional and fund management businesses have been replaced by direct investment, indirect investment and fund management businesses.