UK-based real estate fund manager and venture capital backer Palmer Capital has secured £225 mln (€266 mln) of equity for its fourth development fund.
The Palmer Capital Development Fund IV builds on the third fund, which invested £175 mln (€207 mln) of equity in 15 projects between 2014 and 2016. Alex Bignell, head of UK at CBRE GIP, said the track record of the previous funds made it 'an easy decision to launch a fourth fund'.
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% internal rate of return (IRR) for CBRE GIP investors.
Chris Button (pictured), head of value-add real estate investment management at Palmer Capital, said that although it was now later in the property cycle, the firm was confident of delivering the same returns because of the lack of competition for the type of deals it was pursuing.
'We believe that uncertainties in the property market and flight to prime assets will create buying opportunities for value-add investors, which we are well positioned to exploit,' he said.
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.
About £25 mln of the fund’s equity has already been committed across three acquisitions. The biggest deal is the £11.3 mln (€13.3 mln) purchase from Tesco of Kingsmead Business Park on Howland Road in Thame, where the leases of the two main occupiers, DAF Trucks and Kubota UK, are set to expire this July and in 2018.
