Deals

MSREI leads €1.1 billion German resi buy

The real estate investment management business of investment bank Morgan Stanley and reportedly China’s sovereign wealth fund have joined forces to buy a German residential portfolio of 16,000 homes.

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Morgan Stanley Real Estate Investing (MSREI), the real estate investment management business of investment bank Morgan Stanley, and reportedly China Investment Corporation (CIC), the sovereign wealth fund of China, have made a major investment in the German housing sector.

The partners have acquired for more than €1.1 billion, including debt, a portfolio of 16,000 homes in cities including Berlin, Kiel Rendsburg and Cologne from BGP Holdings, a real estate company that originally started as a joint venture between asset management giant BlackRock and listed property group GPT Group but which since has operated independently.

MSREI made its investment on behalf of multiple vehicles, which, in an announcement by BGP on the sale, were not specified. In August 2015, MSREI held a final closing on the latest in its global opportunity fund series, North Haven Real Estate Fund VIII Global, on $1.7 billion. The firm also invests capital on behalf of its core-strategy Prime Property Fund series.

BGP also did not identify CIC as MSREI’s partner, but Reuters reported that the state fund contributed “the bulk of the money involved in the deal,” citing two sources. In addition to being a major investor in Morgan Stanley itself, CIC also invested in MSREI’s property funds.

The sale is the outcome of a drawn out restructuring process for the BGP assets following the global financial crisis. Rod McGeoch, the firm’s chairman, said: “The sale of the portfolio is a highly commendable outcome given the starting point in 2009 of a company with no value and negative equity to now being able to realize nearly €600 million on behalf of our patient shareholders.”

The firm has approximately 58,000 retail investors following an in-specie distribution to shareholders in the GPT Group made in 2009.

McGeoch added: “To have come this far is a tribute to a group of talented senior executives…whose financial skills and extensive property experience have helped deliver this outcome against a backdrop of the post-GFC period and the more recent impacts of Brexit on European markets.”