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Heitman buys German residential portfolio

The Chicago-based investment manager acquired the 1,000-unit portfolio through its European fund, which it plans to close by the end of the year.

Heitman is continuing its push into the European residential market with the acquisition of more than 1,000 residential rental units and 24 retail units in Germany, the Chicago-based investment manager said last week.

Heitman bought the properties, which are 98 percent leased, from Landericus Limited, a Guernsey-based closed-end investment fund. The purchase, which used capital from Heitman European Residential Investment Partners (HERIP), follows a September acquisition of 125 residential rental units in the Netherlands. While terms for the deals were not disclosed, PERE understands that the two transactions total just under €130 million.

The firm held a first close for HERIP in February and plans to close the fund by the end of the year with about €300 million in commitments, over its original €250 million target, according to Thursday’s statement. With capital from the commingled vehicle, Heitman is assembling a portfolio of small- to medium-sized rental properties and larger single assets across Western Europe for core and core-plus investors.

After the German and Dutch deals close, Heitman will have invested 71 percent of HERIP’s €230 million in committed equity. Together with other investments, Heitman will have assembled a residential portfolio of over 4,700 rented units in Germany and the Netherlands.

“We continue to believe accumulating positions in residential real estate situated in high-barrier-to-entry markets is warranted, given broader macroeconomic conditions in demographically attractive cities in Germany and the Netherlands,” Gordon Black, a senior managing director at Heitman, said in Thursday’s statement. “The properties are extremely well-let and will provide strong income and further growth potential through the prudent use of additional capital to implement various value creation strategies at the asset level.”

Heitman, which manages about $37 billion in assets, began investing in the European residential market with a 2005 financing for Polish condominiums, according to a spokeswoman. The firm made its foray into residential rental investments in the region in 2012, when it bought a 75 percent stake in a 3,000-unit portfolio in Germany from Grainger plc, a public UK residential owner, according to a statement at the time. The portfolio, worth €220 million, was spread across six regions in the country.