UK real estate fund manager and venture capital firm Palmer Capital is looking to sell or develop properties in Serbia and Bulgaria, the company’s managing director told EMIS.
“We have land holdings in Serbia and Bulgaria which we want to sell. We have an investment fund, Palmer Capital Emerging Europe Fund, which we are keen to expand by the purchase of income producing buildings across the region,” Guy Barker said.
Palmer Capital owns a 170,000 square metres development site in Stara Pazova, north of the Serbian capital Belgrade.
“We would like to develop that site, to sell part of it or to sell it whole. Ultimately, we need to develop and act. It is suitable for industrial and commercial use. We can build on it or we can sell plots there, we can put infrastructure in… We are very open to what we do with it,” the executive said, adding that the average value of land in the area varies between EUR 5 and EUR 15 per square metre.
“We have some other land holdings around [Bulgarian capital] Sofia, which are suitable for residential use. We have taken some years to take full control over it, as we had a joint venture in Bulgaria. We bought out our joint venture partner. We are now regulating that land, putting in some infrastructure and we will be selling it for residential development over the next two years. We have a big industrial site in Plovdiv which, similar to the one we have in Serbia, we would like to develop out or trade on over the next three years,” the executive explained.
“None of these holdings have any bank finance on them, so we are not under any pressure from banks to sell, but we would like to move things forward,” Barker noted.
Palmer Capital owns a vehicle called Palmer Properties, which in 2008 bought a EUR 70mn portfolio in the Czech Republic from Spanish telecom major Telefonica.
“The strategy for that portfolio is to sell off the smaller, less strategic assets. The average asset is around EUR 1mn, while some of the assets are EUR 4mn or EUR 5mn in size. Those are the ones that we want to keep. The ones of EUR 0.5mn or EUR 2mn in size in Czech regional cities we would generally want to sell. We want to concentrate on big assets where we see more potential. The buyers are exclusively local Czech investors,” Barker said.
The company is interested in further acquisitions of real estate in the Balkan region.
“Ideally, I would like to buy assets that are EUR 2.5mn to EUR 5mn in size individually. I do not really mind where they are, but they need to be income producers. I do not want to do any redevelopment. If there was a portfolio of EUR 30mn total volume which has 10 assets in it, spread across the region, it would be quite interesting. And, if it had assets in Croatia, Serbia, Bulgaria, Bosnia, that is not a problem. What I do not want to do is individual deals of EUR 3mn in Bosnia. It does not work. But, if you can buy a whole package, that is a good deal,” the director explained.
In February 2012, Palmer Capital took over the Palmer Capital Emerging Europe Fund, originally named Middle Europe Real Estate fund.
“When we took it over, it was distressed, with high expenses, it was producing no net income for the investors and the share price was quite low. We have taken three years to restructure it, we have long term funding in place, the share price is nearly doubled, we started paying dividend and it now has positive momentum. The problem is it is too small. It is regulated fund, a listed fund and it has high fixed costs. If we could double the size of the fund and the fixed costs stay the same, total expense ratio drops and performance then grows up”, Barker said.
Palmer Capital Emerging Europe Fund is EUR 70mn fund listed on NYSE Euronext Amsterdam.