Grainger has teamed up with APG Strategic Real Estate Pool, Europe’s largest pension fund asset manager, to create a £349m private-rented sector fund.
In one of the most significant transactions in the private-rented sector, the fund known as GRIP has acquired the residential property portfolio owned by G:res, a UK market-rented residential property fund valued at at £349.4m.
It was established and has been managed by Grainger since 2005.
Grainger owns a 26.2% equity stake in G:res worth around £50.7m. Its shareholders voted in June 2011 to progressively liquidate the fund.
APG will invest £158m in GRIP and Grainger will plough an additional £59m into the fund, comprising its proceeds from its stake in G:res and a further £9.1m slug of new equity.
GRIP will invest in market-let blocks and portfolios focused on greater London. It will also have scope to invest in build-to-rent development opportunities.
GRIP, which is structured as a long-term fund with five-year renewable terms, will be seeking additional equity from one or two other institutional investors to enlarge the fund further.
Grainger will provide fund, asset and property management services to GRIP via a dedicated management team led by fund manager Michael Lamyman. It will be paid management fees by GRIP which are broadly in line with the fees it would otherwise have received in 2013 for G:res, as well as the potential to earn additional performance fees.
The GRIP transaction follows Grainger’s recently completed German jv with Heitman.
Andrew Cunningham, chief executive of Grainger, said: “We see APG’s commitment as a clear acknowledgement of UK residential property’s growing appeal as an institutional asset class, as well as a significant endorsement of Grainger’s expertise in the UK residential sector and the strength of our operational platform.”
Robert-Jan Foortse, APG head of European real estate, said: “APG has a long history of investing in residential real estate, mainly in the Netherlands. We believe prospects for the greater London rental market are promising and we are enthusiastic about adding this exposure to our portfolio.
“APG has been a shareholder in Grainger for several years and we are pleased to expand our relationship with Grainger via this partnership. This transaction demonstrates our willingness and aptitude for working with investment managers to modernise, recapitalise and extend the life of existing vehicles owning good-quality real estate.”
