Grainger to Use JV to Broaden Funding of $280M German Apartment Portfolio
- Nov 12, 2012
By Scott Baltic, Contributing Editor
A joint venture to be formed by Grainger plc, of Newcastle upon Tyne, England, and Heitman, of Chicago, will invest in a German rental residential portfolio of nearly 3,000 units, currently wholly owned by Grainger, Heitman announced last Friday. The JV, named MH Grainger JV Sarl, will be owned 75:25 by Heitman, on behalf of an undisclosed global institutional investor, and Grainger, respectively. The portfolio’s value is about $280 million.
Subject to the usual conditions, the transaction reportedly will be closing “soon.” The deal, according to the announcement, is consistent with Grainger’s strategy of aligning itself with third-party institutional capital “to make more efficient use of its balance sheet and operational platform.”
The goal of this transaction is to let Grainger leverage its management platform, acting as the JV’s expert partner in German residential property investment. Grainger will also receive fee income for its services to the JV and will continue to directly own an additional 3,400 units in Germany.
The portfolio comprises 2,985 residential units across six regions in Germany, including Bavaria and Baden-Württemberg, and mostly in premier markets with high barriers to entry. It’s made up of 112 properties, a Heitman spokesperson told Commercial Property Executive, the vast majority of which are no more than five stories high and have balconies and well-kept gardens. “Many benefit from interesting period features which tenants find attractive,” the spokesperson added.
German residential, according to Heitman, “is an attractive sector offering strong income-generation characteristics, with limited new supply coming into the market, and offers the potential for significant rental and value growth in the medium to long term.”
“We’ve been evaluating the German mid-priced rented residential market for a considerable period of time and believe that it offers investors compelling risk-adjusted returns,” Rob Reiskin, co-head of Europe at Heitman, told CPE.
Grainger plc is the United Kingdom’s largest listed residential owner and manager, with more than $4.76 billion of residential assets under management across the United Kingdom and Germany.