Companies’ directors to invest £100,000 each in joint venture to buy distressed assets

A group of directors at GVA Grimley has teamed up with Palmer Capital Partners to ‘put their money where their mouths are’ by investing £100,000 each into a fund to capitalise on the bottom of the market.

Palmer Capital Partners directors and around 30 GVA Grimley directors will invest £2m and possibly more between them into the fund. This is the first time GVA has invested in this way.

With equity from other institutional and private investors and debt, the fund’s investment capacity will reach £75m.

The fund – called the Palmer GVA Property Fund – has been set up to buy in the second half of this year at what the directors see as the bottom of the UK market for prime property.

Alex Price, chief executive of Palmer Capital Partners, said: ‘With a number of GVA Grimley directors and all of the Palmer Capital directors investing directly into the fund, it is likely to be seen as us calling the bottom of the property investment market cycle.

‘We are putting our money where our mouths are and saying: “Come and join us.”

‘The fund provides an opportunity for high net-worth individuals and institutions to access to the market recovery via a diversified portfolio, as well as the ability to achieve higher returns than they can get from cash at the moment,’ he said.

The fund, set up as a limited partnership, has a target return of 12% plus a year over the next five years, with a distributable income of at least 6% a year.

It expects to buy small lot sizes from distressed sellers and banks, initially with equity only and later with non-recourse debt – at a maximum loan-to-value ratio of 65%.

Rob Bould, head of capital markets at GVA Grimley, said: ‘The directors of the fund believe that the forthcoming cycle represents the best buying opportunity for a generation.

‘Our strategy is to buy a balanced portfolio of good-quality assets with a high income return that provide an opportunity for capital return, with a view to selling the assets in improved market conditions.’

The minimum investment is £100,000. It is the first time that GVA Grimley, which does not have an in-house fund management division, has invested in this way in the UK.

The fund’s investment committee will comprise Ray Palmer, chairman of Palmer Capital Partners, and Neil Dovey, director in the GVA capital markets team, as well as Price and Bould.

Palmer Capital Partners’ Rupert Sheldon and Chris Button will be the fund managers and the nine regional property companies Palmer Capital Partners has invested in through its venture capital arm, such as Wrenbridge, will work as local asset managers for the fund.

GVA Grimley will be property manager.