Ardgour Capital Services (ACS) is a multi-skilled consultancy providing investment and asset management services to fixed asset businesses and institutional investors. We provide deal sourcing to disposal management solutions focused on improving teams, earnings and capital structure.
Pre-Investment Preparation
ACS will increase the chance of an institutional investment in an emerging business
Construct a business and capital plan
Team planning and construction
Policies and procedures
Build an appropriate pipeline
Marketing strategy, data room and introduction to potential investors
ACS can also operate on behalf of investors undertaking due diligence
Case Study
Andrew was engaged by a listed Hong Kong developer to raise institutional capital for investment in Hong Kong and the GBA.
Over a period of three months in early 2021, a pipeline of seed assets, marketing strategy, business plan, full documentation, policies, asset management strategies, data room and modelling was compiled.
A commitment of USD750m was in the advanced stages of approval when the financial position of the developer required a change in their strategy.
Integration Management
Once a transaction has been completed, ACS can work with the investor or the underlying company over the first three months to:
Agree and lock in a business plan, budget and capital structure to align with the underwriting
Ensure the right HR plan is in place with an agreed-upon incentive plan
Adapt the business’s reporting to fit the investor’s requirements
Case Study
We identified, bought into and funded the growth of a cold storage business. The founding partners fell out leaving us with a strong land buying/developing capability but none of the ongoing operating skills we had originally expected to receive.
We spent considerable time focusing the remaining partner on finding, training and keeping the leasing staff essential to drive revenue. As the industry was nascent, understanding tenants’ business models and affordability limits was needed to identify locations, set rental rates, increase occupancy, and improve future investment underwriting.
Significant work was also required to get the firm to adopt best practice on financial, OHS and ESG reporting. As a result of our work, the company went on to raise capital from other institutional investors.
Strategic, Business and Asset Planning
With existing assets, a reverse approach may be required. Get the assets performing, reorganise the business and capital plan, and then set the strategy for the investment:
Identify market gaps and enhance property positioning through:
Targeted, aggressive leasing
Asset enhancements to maximise the tenant mix and revenue / minimise staff and energy costs
Refinance as appropriate
Determine whether to buy, sell or hold
Case Study
Through the team we built in Pradera Retail Asia, we drove significant revenue enhancement through AEIs and asset repositioning in the Beijing, Chongqing and Shanghai assets. A better tenant mix resulted in significant upticks in NOI.
Energy and staff costs were each a third of overall costs.
To reduce these costs, standardised, centralised accounting, lease, project and risk management were adopted at head office to minimise headcount.
Energy audits were undertaken annually to identify areas of savings including upgrades to the building management systems which also lead to an improving GRESB rating.
Remedial Asset Management and Exit
In a buyers’ market, it is important to close out as many areas of doubt to maximise the exit price. ACS can ensure the team is in place to:
Build solid operating cash flows through asset and capital management
Reduce uncertainty in the buyer’s underwriting
Build the story and attempt to plug potential gaps in advance of negotiation
Make it easy for the buyer to say yes
Ensure all documentation, reporting and financials are in place and clear
Identify and negotiate with potential buyers
Case Study
There were no third-party operatives able to manage the second portfolio of malls owned in China.
A JV was set up with Pradera (PRA), staffed by ex-Macquarie, Pradera and JLL employees who were augmented by an aggressive hiring program. We created a business of 160 staff managing all aspects of the 6m s.f. portfolio.
Having significantly increased NOI, we were able to exit the portfolio at the height of COVID. PRA was sold alongside the assets.
Investment Appraisal
ACS can provide independent analysis of underwriting asset assumptions to investors
This is particularly useful immediately post-business acquisition, or when entering new markets
Rental levels and growth rates, considering cyclical and structural drivers of the market
And any upside potential within the asset itself
Cost structures, current and inflationary impacts
Including the financial impact of tenant repositioning and AEIs
Impact of gearing and interest rates on investment case in the operating period and on exit
Where are the greatest and most likely risks to the base case
Relevant Experience
Andrew brings a nuanced approach to investment underwriting, looking both at macro and practical inputs.
He was the lead contributor to Macquarie’s Asian real estate research thinking, having previously been an equity analyst covering Asia Pac real estate stocks and starting as a research analyst with JLL HK in 1992.
His regionally diverse market knowledge is augmented by deep experience in running assets and understanding tenants across the real estate sectors. This allows an understanding of an asset’s return profile relative to its market, but also in a regional context.
Having worked for institutional investors for 20 years, he also understands the requirements they have when analysing a potential investment.
Capital Advisory
ACS has a wide network of capital providers, both equity and debt, private and institutional
We have access to investors that can provide seed, top up, institutional or core equity
ACS can structure a capital stack that is appealing to investors, banks and potential acquirers
Increased interest rates, COVID-impacted cashflows, and more conservative lending policies have put pressure on existing facilities
We can work with banks on impaired assets to determine the best solution to return capital
Case Study
The first China retail investment was a portfolio of basic big box retail purchased in 2004 with a solid underlying cash flow.
Through the hold period, we raised equity against the portfolio three times and debt four times. We even managed to refinance China’s first CMBS through the crisis of 2008-9.
One investor held through the period and received a net IRR of over 18% and an EM of over 3.5x on this core portfolio. The assets provided the bulk of the return, but the deal was able to be completed, with the then-largest offshore debt, and returns were significantly augmented by our financing structures through the period.