OakNorth provides £50m backing to Paloma Capital

Funding to be deployed within the Paloma Real Estate III fund

• What OakNorth has provided £50m of funding to Paloma Capital
• Why Funding to be deployed within the firm’s Paloma Real Estate III fund
• What next Vehicle focuses on multi-let urban industrial and logistics schemes, trade counter, open storage and self-storage

Private equity firm Paloma Capital has secured £50m of funding from OakNorth.

The backing will be deployed into the company’s Paloma Real Estate III fund through two separate transactions. It follows an earlier £45 million transaction by the lender for the fund in September 2023.

The fund targets investments in multi-let urban industrial and logistics developments, as well as trade counter, open storage and self-storage assets.

Paloma recently completed a final close for its third discretionary UK value-add fund, netting more than £200m, as first reported by Green Street News in November. Launched in 2022, the final close for Paloma Real Estate III is just ahead of the £200m target and follows a first close of £80m at the end of 2022. Around 75% of the capital came from existing investors in Paloma’s previous funds, with the rest committed by three new investors.

The largest asset acquired for the fund is a 250,000 sq ft multi-let urban industrial estate in Bicester, Oxfordshire, bought in September 2023. Paloma followed that deal up with the sale and leaseback of three open storage sites in Chelmsford, Westbury and Leeds, totalling 25 acres, with automotive reseller Aston Barclay.

The fund has also established a self-storage platform with Wigwam, now extending to eight sites. The platform was recently expanded with the acquisition of Pink Hippo Self-Storage.

Accounting for leverage, the third fund has the firepower to invest more than £400m. Around 60% of the fund’s capital is already committed across 22 assets, with around half in multi-let industrial and urban logistics, and the rest split between open storage and self-storage.

Founded by Joe Froud and Jack Pitman, Paloma has raised more than £520m of wholly discretionary capital in three value-add funds since 2015 – mainly from institutional investors across the UK, Europe, and the Middle East. The firm’s investment philosophy is founded on three key pillars: an acute focus on mispricing; an entrepreneurial approach to capex-intensive asset management; and a preference for the majority of its return to come from income.

Jack Pitman, founding partner of Paloma Capital, said: “At Paloma, we continue to pride ourselves on our hands-on approach to asset management and our focus on multi-let assets which provide us with the greatest opportunity to create additional value through carefully thought-out and well-executed business plans.

“Given the experience we had with OakNorth last year when we secured a £45m debt facility following the launch of our third fund, we felt they were the obvious choice. OakNorth’s specialist fund finance operation, led by Mo, is exceptional – they’re experienced and quick and they do what they say they will do.”

OakNorth’s senior director of debt finance, Mohith Sondhi, added: “As a direct result of Joe and Jack’s over 30 years’ of experience in the private equity sector, Paloma continues to be one of the most reputable private equity real estate investors in Europe.

“With a robust track record spanning almost a decade across all three of its value-add funds, we were once again delighted to support Fund III across these two separate transactions. We look forward to supporting Paloma Capital on its future growth plans, as we look to continue to develop our expertise in the funds finance space.”