Heitman sets up European resi fund, absorbs last Grainger assets

We reported in REFIRE back in November that UK-listed residential property investor Grainger plc and its partner Heitman from the US had sold their joint venture German housing portfolio (MH Grainger JV Sarl) to an unnamed German investor for a price of €136m. The sale of the portfolio of 2,500 units represented a further step towards Grainger's exit from the German market, after it put its own solely-owned assets on the market in September.

Now the Chicago-based Heitman has bought 1,595 remaining residential units (in 110 separate buildings) from Grainger for its own close-end co-mingled fund, located mainly in Frankfurt and Mannheim. It says it plans further German residential expansion, and will absorb the Grainger investment team based in Frankfurt, along with the final remaining 1,137 German units pending their sell-off. To structure the deal, Heitman announced the first close of its Heitman European Residential Investment Fund which is targeting €250m in equity commitments from core and core-plus investors.

The fund will invest in small- to medium-sized rented residential properties, along with some larger single assets, starting with Germany and the Netherlands, where it already has a strong history and a strong pipeline of suitable assets. Heitman is one of the largest private residential housing owners in Amsterdam, following a recent acquisition.

Gordon Black, senior managing director for Heitman, commented: “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."

The deal comes a week after Grainger's new CEO Helen Gordon announced a renewed focus on the "compelling" private rented sector market in the UK, where the Newcastle-headquartered company plans fresh investment of more than Stg 850m pounds.