Paloma’s £253m Purdey portfolio takes flight

Buyer set to pump £200m more of equity into the UK light industrial sector

• What Paloma Capital has sold the Purdey portfolio to Partners Group for £253m
• Why Values in the light industrial sector have soared since the assets were bought across 2016 and 2017
• What next Paloma will work with Partners to deploy another £200m of equity into the market over the next two years

Paloma Capital has sold its Purdey portfolio to Partners Group for £253m, React News can reveal.

The price paid for the hotly contested 27-asset collection, made up of 3.6m sq ft of light-industrial space reflects a yield on the passing rent of 5%.

It has been bought by the Swiss firm as part of a broader drive into the sector in the UK. As a result Partners will retain Paloma to manage and co-invest in the portfolio and provide a further £200m to deploy as part of a new core-plus mandate to be invested over the next two years.

Purdey is spread across the UK, with most properties in the West Midlands, Yorkshire and the North West. The largest assets are Globe Industrial Park in Manchester and Interchange Park in Portsmouth with other significant assets located in Wakefield, Stockport, Cirencester, Redditch, Telford, Sheffield, Amesbury and Leeds.

The properties are “well positioned to benefit from the structural tailwinds driving the growth of ecommerce, which has further accelerated following the outbreak of COVID-19” and has “a diversified income stream with a tenant base of over 250 companies from a range of sectors, including logistics, engineering, distribution, trade and manufacturing”.

More capital to deploy

Paloma, co-founded by Joe Froud and Jack Pitman in 2015, bought the Purdey assets across 2016 and 2017, during which time values and rents have soared in the sector, due in part to the rise of e-commerce.  

The sale comes from Paloma’s first fund, which was raised shortly after the company was founded by the former Columbus Capital and Helical duo. Paloma is also around 60% of the way through the deployment of its second value-add fund, having amassed assets of around £200m and anticipates launching its third value-add fund in the second half of this year.

A flurry of industrial portfolios have changed hands in the UK in the past two months as investors seek to create scale in the booming market, including Cerberus Capital Management and Arrow Capital Partners’ £180m acquisition from Ares Management, AIMCo’s £265m purchase of a portfolio from Starwood Capital and Goldman Sachs’ £100m purchase from NFU.  

Froud and Pitman said: “We acquired most of the properties in this portfolio in individual deals in 2016/17, having launched Paloma in 2015, and have invested a further £22m of capital since then on improving the assets. We are very pleased with how they have performed during this period. We are delighted to have now found such a respected partner who shares our vision for the sector and are looking forward to working with them to grow the vehicle to the next level”.

Paloma Capital was advised by Knight Frank, Greenberg Traurig and Ogier. Partners Group was advised by Clifford Chance and Deloitte.