Paloma launches latest fund for £450m logistics charge

Firm has already completed first close

• What Paloma Capital has launched Paloma Real Estate III
• Why To raise £200m of equity and aggregate £450m of assets
• What next With £80m already closed it is targeting primarily multi-let urban logistics as well as retail warehousing

Paloma Capital has launched and held its first close for its latest investment vehicle, Paloma Real Estate III, React News can reveal.

The investor, co-founded by former Schroders and Helical execs Joe Froud and Jack Pitman, is targeting £200m of equity. With leverage, that will provide Paloma with around £450m of firepower.

It has drawn in an initial £80m, with equity coming almost entirely from existing Paloma investors. The Paloma team are also “co-investing heavily” into the vehicle to align with investors.

“With everything going on in the world right now it’s a difficult time to raise fully discretionary equity”JACK PITMAN, PALOMA CAPITAL

The new Paloma vehicle will have an opportunistic strategy and can invest across sectors and regions, although, as with its two previous funds, it will focus primarily on income-producing, multi-let urban and logistics schemes.

It will also have a small allocation to value-led retail warehousing. The manager is seeking to take advantage of the relative lack of liquidity in the market at present and the recent slump in values in the logistics market.

Likely asset types include urban logistics, trade counters, open storage and EV charging parks with the potential to add value from capital investment and active management. Paloma intends to target relatively small ticket sizes of £5m to £15m.  

Paloma’s debut fund is now 90% realised and is expected to generate a net IRR of 15% and a 1.5x equity multiple. Much of the realisation was undertaken through the £253m sale of Project Purdey last January to Partners Group, with which Paloma also has a £200m core-plus mandate.

The manager’s second fund is 90% invested in industrial and logistics, with the balance in retail warehousing and one London office. It is 10% realised with its mark to market returns “substantially ahead” of 15% net and 1.5x equity multiples.   

“Very active acquirers”

Froud said: “We continue our conviction that smaller urban industrial and logistics buildings will continue to outperform due to the lack of supply and the depth and breadth of occupational demand. We are delighted to have raised equity at a time of such limited liquidity in the investment market and plan to be very active acquirers over the coming 12 months.”

Pitman added: “With everything going on in the world right now it’s a difficult time to raise fully discretionary equity, so we are very pleased that we’ve achieved the same amount at our first close as we did for Funds I & II and that our existing investors have been so supportive, once again. We look forward to completing further fundraising closes over the next few months.”

Paloma Capital was advised by Lazard, Greenberg Traurig, Ogier and Langham Hall.