September 28, 2017
After a two-decade search Palmer Capital has finally found a property company to back in the North West. It is now planning an assault on the region and on Manchester in particular.
The fund manager and venture capitalist has teamed up with Harlex Property, a new company founded by former Kier Property and Argent development director James Nicholson.
Harlex is aiming to be among the top three largest developers in the region within the next three years and within the next three to five years expects to have a £200m development programme.
It will cover a broad range of sectors including office, last-mile and big-box logistics, out-of-town and roadside retail, leisure and mixed-use.
It will be development and asset management-oriented in order to deliver the value-add or opportunistic returns Palmer is looking to generate. Typically it will make initial investments in each project of between £5m and £25m, but also up to £50m, and then deploy the necessary capital for each build.
As with the other development companies Palmer backs (see below), each of which covers a different geographical region, a third of Harlex is owned by the fund manager to prevent any sense of financial preference between them. Palmer executive chairman Ray Palmer will be chairman of Harlex and chief executive Alex Price will also sit on the Harlex board.
Harlex projects will be primarily funded by Palmer-managed vehicles, which at present have £500m to invest, such as its £225m Palmer Capital Development Fund IV.
“We’ve had an enthusiasm to have a Manchester property company for ages,” says Palmer. “It is the only principal region where we haven’t had a property company that we back. The North West is hellishly important and we have done a few deals there, but we have just never found someone we felt comfortable with.”
At the end of last year the Palmer business was refined through a sale of its Asian arm and downsizing of its European presence and this brought the need for such an expansion into even greater focus. It considered around 40 subsequent responses after it received strong interest from a broad variety of potential suitors.
Nicholson attracted Palmer’s backing due in part to his breadth of experience across sectors and for undertaking major projects as well as his character.
During his time at Argent between 2006 and 2011 he led the development of the company’s flagship 271,000 sq ft 1 St Peter’s Square’s project in Manchester, helping to structure its joint venture with the Greater Manchester Pension Fund, taking it through OJEU and securing KPMG as a prelet.
At Kier he has been involved in its 3 Sovereign Square project in Leeds, 81 Fountain Street in Manchester, industrial schemes around Cheshire, and the development of a leisure project in Walsall.
“With the strong and consistent financial backing from Palmer we will be looking at logistics along major arterial routes where there is a lot of potential as last-mile delivery continues to grow,” says Nicholson.
“We shouldn’t ignore my office background and Manchester will take more good quality offices, and we are interested in speculative development if we can find the right project. In the last recession, Manchester yields held up very well and were resilient and there is still room for rental growth.”
The fact that Nicholson has been the final conduit for Palmer to come to the North West should help open doors, he says.
“Having Palmer really active spending has to be great for the region. It will make people pay attention and it is such a good start to have that weight behind you in conversations of a name that has not been overly active before. When we approach councils or site owners it will be a real positive.”
Palmer’s hunt for the next venture is always ongoing and the Harlex tie-up is not the only one it is close to securing. It is in the final throes of making its first investment in proptech and is also on the lookout for a chief technology officer to help integrate the use of data into its business.
For now though, after a long search, it can be pleased at least that it has finally found its foothold in the North West.
Palmer Capital-backed development businesses
Wrenbridge Land – http://wrenbridge.co.uk/
Angle Property, South East – http://www.angleproperty.co.uk/
Cubex Land, South West – http://www.cubex-land.com/
Danescroft Land, London and South East – https://www.danescroft.co.uk/
Harlex Property, North West
Manse, Scotland and North – http://www.mansellp.com/
Opus Land, Midlands – http://www.opusland.co.uk/
Opus North, Yorkshire and North – http://opusnorth.co.uk/