Nadav Livni shares details on the acquisition as well as HPPF III strategy in an interview with REFI Europe10 August 2020
Hillview’s £300m fund pockets Birmingham offices in debut deal
Fund manager Nadav Livni shares details on the acquisition as well as the fund’s strategy in an interview with REFI Europe
By REFI Europe, Anna-Marie Beal 10 August 2020, 4:40 pm
Hillview Real Estate’s latest strategy, Hillview Partners Property Fund III, has purchased multiple buildings near Birmingham, in the West Midlands – marking its debut acquisition. Launched last month, the value-add fund aims to secure £150m in equity commitments to invest £300m in multi-tenanted office properties across the UK.
“Being in this value-add space now, where there’s a dislocation in value as the sector is recalibrating itself, is exactly the right place to be,” fund manager Nadav Livni told REFI Europe in an interview today.
“Our team is very busy but also excited to have a new investment power with this new fund in the current environment [which] results in us being even more critical of the investments that we make in terms of location as well as pricing.”
Kings Court comprises three office buildings located at Birmingham Business Park – one of the region’s most established commercial hubs.
“Location is key,” said Livni. “We take an occupational view of the market and look at cities where we feel there’s an imbalance of supply and demand.”
Hillview Real Estate – part of the Hillview Group, of which Livni is the founder – is currently active in Birmingham, Manchester, Leeds, Nottingham and Bristol and plans to enter Liverpool and Sheffield.
“There’s a shortage of supply in these locations and occupational demand is steadily increasing, while tenants want the occupational flexibility of either being in the centre or at the edge of town –our portfolio really straddles these two locations,” Livni said.
Kings Court comprises six self-contained units across 51,503 sq ft. The office facilities, ranging from 1,500 sq ft to 17,150 sq ft, are leased to SMEs as well as international technology companies. They were bought from property manager Catalyst Capital for £9.7m, reflecting a net initial yield of 8.72%.
“The going-in price was a very important factor, both capital value and at rent level, which means we will be able to refurbish the property and regear these leases at a higher rent level and end up with a very different, repositioned property portfolio once we’ve implemented our proactive value-add approach,” Livni explained.
Using leverage of about 50%, Hillview Partners Property Fund III aims to deliver a total net return of 12% per annum to investors by purchasing well-located, multi-tenanted, institutional-quality properties in UK cities and regions with favourable supply-demand dynamics. Individual investments will range between about £10m and £25m.
“Being a value-add manager means we’re not driven purely by capital structures that need to squeeze out the last bit of return, in fact we’re quite conservative from a financial perspective,” said Livni. “We do not invest in distressed assets but we do, at times, buy from sellers that are distressed.
“For us, it’s really belts and braces – creating the capital growth as well as investment value of the
property which gives us a lot more protection and control over the environment,” he added. “Being a closed end fund – which I’m a strong advocate for – means we have a sufficient period of time as a value-add manager to unlock the value of our work with capital volatility.”