Fundraising - MAY 12, 2017

Palmer Capital raises £225m of equity for largest-ever fund

by Released

Palmer Capital has raised £225 million ($290 million) from CBRE GIP, the multi-manager arm of CBRE Global Investors, for its fourth value-added U.K. real estate fund, Palmer Capital Development Fund IV.

The Palmer Capital Development Fund IV builds on the success of the third fund, which invested £175 million ($225 million) of equity in 15 projects between 2014 and 2016.

The new four-year fund will have the same two-year investment window as the previous vehicle, as well as the same target to deliver a 15 percent internal rate of return for CBRE GIP investors.

The fund will explore three broad investment themes. The first is to acquire land with a view to securing planning permission for residential development; the second is to speculatively develop new regional offices and sheds; and the third is to add value to standing investments through asset management.

Leverage will also be used to enhance returns, up to a limit of 50 percent loan-to-value — although the gearing level likely will be lower than this.

About £25 million ($32 millon) of the fund’s equity has already been committed across three acquisitions. The biggest deal is the £11.3 million ($14.5 millon) purchase from Tesco of Kingsmead Business Park on Howland Road in Thame, England, where the leases of the two main occupiers, DAF Trucks and Kubota UK, are set to expire this July and in 2018, respectively.

The fund has also bought 5.7 acres of land in Spofforth in North Yorkshire with plans to secure residential planning consent.

It has further acquired 125 acres of land on the south-eastern outskirts of Ayr, Scotland, for £3.4 million ($4.4 millon). The land benefits from planning permission in principle for a mixed-use scheme that the firm will reconfigure to increase the residential component.

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