Palmer Capital backs UK's first solar parks fund

Pan-European real estate fund manager Palmer Capital has teamed up with UK renewable energy group Low Carbon to launch the first fund formed specifically to invest in UK solar parks.

The UK Solar Income Partnership aims to raise £52 mln (EUR 60 mln) from institutional investors, which will be used to acquire three existing solar parks from Low Carbon, the first 5MW sites to receive OfGem accreditation in the UK.

The Solar Fund will be a 10-year, closed-ended, tax efficient investment vehicle, which aims to provide investors with the opportunity to receive an attractive long term rate of return supported by Government backed income in the form of the Feed in Tariff. The FITs have been introduced by the Government to help increase the level of renewable energy in the UK towards meeting the legally binding EU Renewable Energy Directive target of 15% of total energy from renewable sources by 2020. The FITs are RPI indexed and applicable for 25 years.

The fund will target an 8% net return to investors per annum, with a high yielding 8% annual distribution and there is an option to extend the fund to 25 years. The management team will co-invest £2 mln of equity into the fund. Palmer Capital is acting as sponsor to the fund while Low Carbon, developer of the solar parks, will be responsible for fund and asset management.

The Solar Fund will acquire three completed and operational 5MW solar parks, all of which have been developed by Low Carbon. The sites are located at Kilkhampton, Hayle and St Austell in Cornwall, and are situated in prime solar positions of between 21 and 25 acres. The three parks comprise over 65,000 photovoltaic solar panels producing over 15 million kWh (Kilowatt hours) per year. The Solar Fund also has an option to acquire a fourth solar park, also in Cornwall, which, if exercised, would mean that the fund own four of the 12 solar parks in the UK.

Commenting on the Solar Fund, Alex Price, CEO of Palmer Capital said: 'We are one of the first property companies to invest into renewables, and one of the first to see a new alternative institutional asset class emerging from the cross over between real estate and renewable energy schemes.'