Tag Archives: Dutch

German investor closes massive Dutch housing deal

German property investor Patrizia has signed a 5,500 home acquisition deal, the largest transaction seen to date in the Dutch housing market that gives a hint of the way the UK rental market could go.

The EUR578 million deal will see Patrizia taking on a mixed rental housing portfolio previously owned by Dutch housing association Vestia. The investor will place the homes within one of its investment funds, which will use money from one of the German pension funds as its major source.

Could an investor of the scale and confidence of Patrizia enter the UK rental market as an investor? Having disclosed why it likes the Dutch market, there are some common themes, so such a possibility is not far fetched.

The reason for Patrizia investing in the Dutch market is down to its belief in long term value protection and growth. This is due to projected population growth as far ahead as 2025, falling average household sizes and therefore continuing significant demand for housing.

“For some time now, our institutional investors have had such confidence in us that they are investing with us outside their familiar national borders,” commented Klaus Schmitt, COO of Patrizia. The company says it is on track to become Europe’s leading real estate investment company.

The portfolio that Patrizia has bought into has 340,000 sq metres of residential floorspace in total, with just 3% vacant. Around 70% of the homes acquired are currently subject to rent control.

Patrizia already operates three investment funds specifically focused on the residential market. Of these, two are investing in German properties, with a third looking wider across Europe for its investment opportunities. Its major German investment deals included the EUR1.4 billion purchase of a 21,000 home portfolio in 2012, and a co-investment in a 31,900 unit portfolio in 2013.

Patrizia is already investing modestly in the UK, through minority stakes in commercial property deals. It holds 10% of a company holding properties in Birmingham, Bracknell and Camberley, and also took a 5% interest in the acquisition of the Winnersh Triangle (or IQ Winnersh) commercial estate west of London.

M&G invests in Holland housing as Dutch investors look to UK PRS market

Investor M&G has committed EUR110 million of mortgage finance to back the acquisition of a Dutch portfolio of 1,250 homes, including rental flats in Amsterdam. Yet the deal comes after the investment manager recently suggested investment activity was likely to be in the other direction, as Dutch residential investors eye up opportunities in the UK market.

The Dutch deal sees M&G providing 10 year funding for the portfolio of homes in Dutch cities, as well as a few commercial properties. The homes are located in housing apartment complexes in Amsterdam, Groningen, Heerenveen and Rotterdam. Unusually, the deal gives the borrower a combination of fixed rate and floating rate finance, a more flexible arrangement than that generally offered by Dutch banks.

“The Dutch market, both in the commercial as in the residential area, has had a difficult period and fundamental problems but, for investors such as M&G with good resources and client capital to deploy, there will always be relative value opportunities,” said M&G’s head of senior mortgages Paul Dittmann.

“We have been and still are a large lender to residential portfolios in the UK and Germany, and the asset class is well suited to our investor base. The Dutch market has its own particularities, including a high level of regulation in both the rental market and owner occupier market, but on the whole this was an appealing investment for us.”

The deal is a contrast to market comments from colleagues at M&G who last month suggested it is likely Dutch investors will shortly plough into the UK private rented sector market, where a “perfect storm” is inviting them to take an interest. “Shifting demographics, relatively low levels of construction and landlord-friendly UK regulations are trends that will continue to boost the UK rented sector for the foreseeable future,” said Stefan Cornelissen, head of institutional business development for Benelux and the Nordics at M&G Investments. “Such factors are luring Dutch and other international investors to the UK.”

For the Dutch, the UK market also contrasts with their own home situation, where renting is in decline, with the PRS sector representing 10% of all households, against 17% in the UK. “This suggests that in terms of the number of dwellings in the PRS, England alone is more than three times the size of the Netherlands,” said Alex Greaves, residential property fund manager at M&G.

The Dutch market has also seen good supply of new homes, with almost 10% added to the national stock of homes in a decade, moving ahead of household growth. In contrast, the UK continues to see a shortage of housing, largely due to the inability of politicians to ease the country’s planning system to meet demand.