Palmer Capital Partners has raised £36m of equity for its second development fund, including capital from some of Europe’s largest institutional investors.
Palmer raised the equity from existing investors in Palmer Capital Development Fund II, and will look to take advantage of the rise in sales it predicts will be instigated by banks in the second half of the year.
According to unlisted fund representative body INREV, it is one of the few closings for a UK opportunity fund so far this year, with investors so far preferring to invest in less risky core and core plus funds.
Investors in the fund include the Duchy of Lancaster, which holds land, property and assets on behalf of the Queen; ING Real Estate; Schroders and Aberdeen Asset Management.
The new equity raising accompanies a three-year extension in the fund’s life to 2013. It initially raised £80m of capital in 2006, and invested £160m of debt and equity in 2006 and 2007.
In 2008, the fund sold assets in order to pay back its debt, and is now looking to reinvest.
The £36m of equity raised can also be geared to around 50%, and will target returns of 12%. The fund will be managed by Chris Button.
“The successful capital raising shows that investors are now coming round to the fact that opportunities are going to start coming out from banks in the second half of this year and at the beginning of next year,” said Alex Price, chief executive of Palmer.
“While the expected flow of sales from banks has not happened yet, the amount of refinancing that needs to happen over the next few years means that it will come through. Banks have woken up to the fact that, while they don’t want to sell at a loss, they can’t hold on forever either as short lease lengths mean that values deteriorate.
“Most of the things that will come out of banks will need asset management, as they will have been undermanaged by banks. We will look to work with tenants to provide property solutions as well as financing solutions.”
