Paloma lines up five deals as second fund raises £80m

Property Week
Richard Williams

Paloma Capital has raised £80m in the first closing of its second real estate fund and has already made several acquisitions for the new vehicle.

The investment manager’s Paloma Real Estate Fund II (Paloma Fund II) has exchanged contracts to acquire two multi-let warehouse estates in Wakefield and Chester.

It is also in exclusive negotiations to purchase two further warehouse estates and a portfolio of three single-let warehouses.

The combined price of all five deals would total £40m, representing a yield of 8.2%.

Equity for Paloma Fund II was raised from 14 investors, including sovereign wealth and state pension funds, endowments, charities and family offices from the UK, continental Europe and the Middle East.

The fund has a fundraising target of £150m and further equity closings are expected over the next nine months.

“Having discretionary capital in this market and the ability to complete purchases without needing bank finance is a big advantage, as shown by our success in agreeing five separate purchases totalling £40m so quickly after completing the first equity closing of Fund II,” said Paloma co-founder Jack Pitman.

The fund has an eight-year life and is focused mainly on smaller, multi-let warehouse estates in urban areas.

Opportunistic investments

It will also make opportunistic investments in other sectors such as offices in London and major regional cities as well as out-of-town convenience retail.

Paloma has also completed the acquisition of a warehouse and additional land in Banbury, Oxfordshire, in its final acquisition for its first real estate fund, Paloma Real Estate Fund I.

The 200,000 sq ft former Jacobs Douwe Egberts coffee distribution centre is situated just off junction 11 of the M40. The 13.7-acre site includes 4.4 acres of development land.

Paloma has appointed Graftongate Properties as development manager to extensively remodel the 200,000 sq ft unit. It also plans to build up to 70,000 sq ft of warehouse and trade units on the development land. The project has a GDV of about £30m.

Paloma Fund I has assembled a portfolio of more than 5m sq ft since its inception in December 2015.

GVA acted for Paloma and Graftongate on the Banbury deal and has been appointed as letting agent alongside White Commercial. Greenberg Traurig, Ogier, Langham Hall and Lazard & Co advised Paloma on the fundraising for Paloma Fund II.