EUROPE - Palmer Capital has completed its acquisition of fund manager Middle Europe Investments (MEI), absorbing all but one of the Dutch company’s offices.

Speaking with IP Real Estate, Palmer Capital’s managing director Guy Barker said the company’s next step would be to rectify a “glaring omission” and expand into the Polish market before the end of 2013.

The acquisition will see all €230m of MEI’s assets transferred to Parker, with the company taking on all but one of its offices, including ones in Russia, Bulgaria and Slovakia.

However, Barker explained that fewer than 10 employees from the Czech Republic’s office in Prague would join.

“The Czech operation within MEI was a bit of an empire within an empire and rather opaque, which was also a concern to the Dutch regulators,” he said.

“So we decided to make a clean sweep in Prague, [and] we didn’t buy the Czech business.”

Chairman Ray Palmer nonetheless was upbeat about the acquisition.

“It’s turned our continental business into a much more important part of our overall business, and this is a really significant quantum leap in terms of continental Europe as far as Palmer Capital is concerned,” he said.

Barker said the decision not to take on the Prague office’s platform was not a problem, as Parker Capital already had an established office in the region, with several senior staff members considering the city a “home base”.

He said that while he was unsure about the perception of Central and Eastern European property assets in the UK, German institutional investors had already accepted several of the region’s countries as “safe” - citing the Czech Republic, Slovakia and Poland.

“They have very high levels of transparency, very good due diligence - you can get all the professional support you need,” Barker said.

While he acknowledged it was a “glaring omission” on the part of Palmer Capital not to have an office in Poland, he said this would be rectified within the next 18 months.

“A lot of people that we want to work with, running existing funds that need help, have got exposure to Poland,” Barker said, adding that it was “logical” to expand into the region.

He said Russia was a “much maligned” market that he personally was a supporter of, but conceded that some of the countries in the Balkans had proven problematic since joining the European Union.

“Serbia, Romania, Bulgaria have disappointed a bit - particularly Bulgaria and Romania over the past few years, they got rather hyped,” he said, arguing that prices had “rocketed” upon their ascension to the single market and were still not sufficiently transparent.

Barker added that while the company was active in Hungary - according to Palmer, to “sort out problems” that arose in third-party funds - he did not view the country as an attractive opportunity for institutions.

He said it was unwise to enter the market unless investors were looking to target damaged debt.

“The underlying situation in the Hungarian property market is not good,” he said. “It is an inopportune moment to try and persuade institutions to enter the market.”

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