Palmer in £100m UK JV with Saudi firm SEDCO

The London-based private equity and venture capital real estate firm has formed a partnership with the Saudi Arabia-based investment group to deploy an initial £100m via a core-plus strategy.

Palmer Capital, the London-based private equity and venture capital real estate firm, has formed a partnership with Saudi Arabia-based investment group SEDCO Capital expected to lead to £100 million (€126 million; $156.7 million) of equity deployed into the UK’s property market.

Palmer said the partners’ strategy was to invest the capital over the coming 12 months and that there was potential to invest further equity from SEDCO “upon successful investment”.

The partnership was brokered via their relationships with Cleveland-based investment and advisory firm, The Townsend Group.

For SEDCO, Palmer will target investments via a core-plus strategy from typically £20 million to £50 million in size. The firm said its focus would be on the recovering office and industrial markets in the south east of England “and beyond”.

A first transaction is already close to being executed. Palmer has gone under offer on the Blakelands Industrial Estate, a multi-let industrial estate in Milton Keynes, for £28.2 million from US real estate investment manager, Cornerstone Real Estate Advisors. The transaction reflected a net initial yield of approximately 8 percent. Palmer said it would seek to complete further transactions before the year is out.

Rupert Sheldon, director at Palmer Capital, said of the partnership: “We are very excited at the prospect of forming a strong and lasting relationship with such an established partners from the Middle Eastern region. We believe that our ‘USP’ of handpicking local markets where we have a strong presence through our established local platform should help ensure superior returns for the mandate over an extended period of time.”

He added: “This mandate fits perfectly with our strategic growth plans for the business and is entirely complementary with our other areas of activity across the UK.” 

Yaser Saleh Salem Binmahfouz, a vice president at SEDCO, which manages and advises on in excess of SAR11 billion (€2.36 billion; $2.9 billion) of assets across multiple asset classes, said: “Working together with our trusted adviser, the Townsend Group, we selected Palmer Capital from a short list of preferred managers. Their track record and ability to execute for the mandate was a key determinant in selecting them as our UK partner. We look forward to building a lasting and successful relationship.”

Palmer has slowly expanded from being venture capital focused in the UK to adding a meaningful third-party investment management function that also takes in European and Asian marekts. It currently manages more than £600 million of assets.

In Asia early this month it hired former Pramerica Real Estate Investors executive Joyce Lo in part to extend its Eastern relationships with prospective future backers.