June 20, 2014
Palmer Capital has formed a joint venture with CBRE Global Investors to launch its latest, and largest, opportunistic fund. The venture capital and fund management firm’s new UK opportunistic and value-add vehicle, Palmer Capital Development Fund III, has taken in £75m from CBRE Global Multi Manager in a first close and aims to grow to £250m. CBRE GMM will be the dominant investor in the regional fund, recycling capital coming out of Palmer’s first two vehicles. It will invest £75m in a second close in six months. It will also hold a position on the investment committee of the fund as part of the jv agreement. Palmer Capital’s Development Fund I and II both raised money from a broad base of investors including Aviva Investors, the Duchy of Lancaster and The Wellcome Trust, rather than forming a partnership to anchor the fund. The third fund will be opened up to third-party investors only after the next close. Palmer Capital chief executive Alex Price said: “We approached CBRE GMM and told them how much we wanted to raise in the first close, and they agreed to commit the whole amount. We tend to raise only small amounts in each close, so we don’t raise more than we can spend. So we decided to hold back from approaching other investors.” The new fund, which will invest £5m to £30m into regional assets across a range of sectors, has lowered its target return to 11-15% per year “because of changes in the interest rate environment”. Palmer’s two previous funds had a 12-15% target return. The closed-ended fund has a four-year lifetime with an option to extend by one year. This compares with the £52m PCDF I, launched in 2004, which had a seven-year lifespan and three-year extension. It will wind down by the year end. It is also shorter than the £120m second fund launched in 2006, which had an initial four-year life with a five-year extension which will return money to investors by the end of 2015. Last month rival Mountgrange raised £200m for its second UK opportunistic fund, Clearbell Property Partners II. Palmer Capital has not agreed any debt for the fund, but can gear up to 50% where needed. The two previous development funds have been geared to 15-20%. Palmer’s Chris Button, who manages PCDF I and II, will manage the fund. Author: Sophia Furber, Estates Gazette Link: http://www.egi.co.uk/news/palmer-cbre-fund-aims-for-250m/?keyword=palmer/CBRE