Heitman has purchased a 75 percent stake in a nearly 3,000-unit German rented residential portfolio from Grainger, the UK’s largest listed residential owner and manager. The Chicago-based real estate investment management firm purchased the stake for €54 million assuming the portfolio's senior debt in the process.
Heitman bought its stake in the portfolio, valued at roughly €220 million, on behalf of a global institutional investor. Although the firm declined to disclose the identity of the investor, a report by CoStar News identifies the investor as the National Pension Service of Korea.
The transaction is in line with Grainger’s previously stated strategy to align itself with third-party institutional capital to make more efficient use of its balance sheet and operational platform. The deal will enable Grainger to leverage its management platform, acting as the venture’s expert partner in German residential property investment. Grainger will receive fee income for its services to the venture and also retain a strategic stake in the portfolio.
For Heitman, the venture represents a further step in its growth in Europe and the continuation of the firm’s successful global strategy of identifying promising trends ahead of the overall market. In addition, the deal allows the firm to align itself with a strong local operator in order to deliver results for its investors.
Rob Reiskin, co-head of Europe at Heitman, said in a statement: “With most of the assets located in high barrier-to-entry markets, such as Bavaria and Baden Württemberg, the venture provides a rare opportunity for institutional investment where it formerly has been difficult to gain exposure.”
The portfolio comprises 2,985 residential units across six regions in Germany. Grainger continues to directly own a further 3,400 units in Germany.