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Money, Sale, Deal
However, money laundering can be hard to eradicate because it can happen at both the construction and the sales level, Seidner warned. ‘Real estate is expensive, which means that you can launder a lot of money in one go,’ he said. ‘Also, if a unique building comes up for sale, there really isn’t an existing price to compare it to, which offers an opportunity to hide a lot of money because the sale price isn’t transparent.
The UK-listed residential property investor Grainger plc and its partner Heitman from the US have sold their joint venture German housing portfolio (MH Grainger JV Sarl) to the giant housing group Vonovia (ex-Deutsche Annington) for €136m. The sale of the portfolio of 2,500 units represents a further step towards Grainger's exit from the German market, after it put its own solely-owned assets on the market in September.
According to outgoing CEO Andrew Cunningham, the timing is opportune for Grainger. “Having taken advantage of the strong investor appetite forGerman residential assets, this transaction is evidence of further progress in our objective to simplify the business, enabling Grainger to focus resources on its core competencies and recycle capital into growing our UK private rented sector portfolio.”
For the Newcastle-headquartered Grainger, which is the UK's largest private landlord, the sale of its 25% stake in the JV will result in about €48m gross including performance-related compensation, and the group estimates the expected pre-tax earnings to be €16mn. Grainger has been the asset manager of the portfolio for the JV. They also state that the IRR for the four-year joint venture is 42%. The sale is expected to be final by year’s end.
In 2012 Grainger sold the Chicago-based Heitman 75% of its then 3,000-unit German portfolio valued at €232m, including outstanding debt. The properties are nealy all based in western Germany.
In March the company reported it had 2,814 managed, market-rent units, valued at €197m, in Germany. These are up for sale, along now with the units in the JV with Heitman.
Recent reports from the UK suggested that activist investor Crystal Amber, a Guernsey-based fund with a record of targeting small-cap companies and which holds a 3.2% stake in Grainger, has been pressurising the group to refinance its debt and seek a takeover by an institutional investor. Grainger's shares have long traded at a discount to their net asset value, in contrast to most of their listed peers in London, which trade at a premium.
Crystal Amber was quoted as saying it believes there is hidden value on Grainger's balance sheet because of its ownership of properties valued at below their open market sale price. Grainger owns £1.5bn of rent-controlled homes in the UK, and a further £1.1bn of homes rented at market rates, many of which are in London and the southeast, where property prices have risen strongly.
In its full year results to end-September, Grainger reported recurring profit of sterling £41.2m , down from £47.1m a year ago. Gross net asset value per share rose 9.7% to £3.19.
Grainger was in the headlines in the UK recently for becoming the first FTSE company to appoint women to its three most important board positions, with new CEO Helen Cunningham succeeding Cunningham next month, Vanessa Simms taking on the role of finance director, under the supervision of the company's chairman Baroness Ford.
