Heitman, the Chicago-based private equity real estate firm, has launched its first fund to be focused exclusively on private rented residential property in Western Europe.
The firm, which manages $34.8 billion of assets worldwide, announced Friday it had launched the Heitman European Residential Investment Partners fund with the aim of collecting a portfolio of rental properties to offer core and core-plus style returns to its investors.
It is hoping to amass up to €250 million in equity commitments for the vehicle and said it had held a first closing for it already, declining to disclose the amount raised.
Heitman also said a first investment for the fund was completed. The firm acquired from London-listed property company Grainger 1,595 homes in Germany, spread over 110 properties and comprising more than 1.1 million square feet of accommodation. The portfolio includes homes in Frankfurt and Mannheim.
In its own announcement on the transaction, Grainger said the transaction was valued at €124 million. According to the property company, Heitman used approximately €55 million of cash and assumed the portfolio’s debt of approximately €69 million.
Grainger is essentially exiting the German residential market through this transaction. As part of the deal, Grainger Deutschland, the Frankfurt-based management team responsible for the assets, have transferred to Heitman control.
The deal sees Heitman’s investment in residential assets worldwide grow to almost €10 billion.
Further deals for the vehicle will now be sought and Heitman expressed an ambition to also make outlays for the fund in Amsterdam, a city in which the firm already has assets under management.
“Today’s announced seed investment and the launch of Heitman European Residential Investment Partners, along with onboarding of a highly talented residential specialist team is indicative of Heitman’s conviction in the merits of this strategy, specifically, the ‘Living Sectors’ – rented residential, as well as student and senior housing – where we see good relative values,” commented Gordon Black, senior managing director for Heitman. “We are very excited by our newest acquisitions which represent a win-win for both Heitman and Grainger and our respective European investments.”