Tag Archives: Patrizia

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Patrizia bags Manchester PRS prize

German investor Patrizia has secured a major private rented sector site in Manchester, with the acquisition of the First Street development in the city.

The deal involves Patrizia buying a 20 acre development site from Ask Developments. First Street includes a mix of sites for development, along with some completed elements. Of most interest to the company will be the project’s residential element, which will see Patrizia build around 500 apartments for long term private sector rental.

The masterplan for the site has already been granted approval for up to 1 million sq ft of commercial space, as well as the residential element. A first phase has recently been completed, containing a hotel, offices, arts centre, student accommodation and retail. Shop and restaurant operators including Sainsburys and Pizza Express have already committed to units in the scheme.

Developer Ask Property Developments has developed the project to date in association with Manchester City Council, and will remain with the project as development manager. Resimarketnews understands Patrizia has been trying to close the deal on the site for around 18 months.

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The First Street portfolio includes One First Street, a completed 180,000 sq ft office development that has occupiers including Ford, Autotrader and Jacobs Engineering. The occupiers have leases with an average nine years to run, and Patrizia is expected to sell this building to a pension fund or similar institutional occupier.

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Also included in the sale is a new hotel. The 208 room property, which is just being completed, will open under the Innside brand, operated by Spanish hotel group Melia. The hotel is scheduled to open in late 2015, and will be the first under the Innside brand in the UK. The brand was launched in Germany, and is set to open in key cities internationally over the next few years.

“With this investment, our property assets under management in the UK now amount to more than a billion pounds,” said James Muir, managing director of Patrizia UK. “Driven by attractive economic and demographic fundamentals in Manchester, and the growing trend for urbanisation, we are anticipating strong demand for this centrally located, high-quality accommodation which will be tailored to the private rental sector. Together with the new commercial buildings we expect to create an attractive investment opportunity for institutional investors. We see this project as an ideal first investment for our planned Patrizia UK PRS Fund.”

Patrizia has residential and commercial holdings in Germany, where it is a major residential landlord with a pipeline of around 4,000 homes. In the UK, it has built a commercial property portfolio and has long declared itself prepared to invest to build a substantial position in the UK’s private rented sector.

Patrizia plans push into UK residential rented sector

One name expected to be seen in the UK private rented sector soon is German investor Patrizia. The company has a long history of residential investment in Germany, and recently started investing in the UK, initially in commercial properties.

The company was set up in 1994 and since listing on the German stock exchange, has grown substantially in the last decade. It is Germany’s third largest housebuilder, and invests substantial amounts of long term funds for other institutional investors from across Germany.

Today, the balance of Patrizia’s German portfolio is around half commercial, half residential – a model that is likely to be followed in the UK. According to a research paper put out by the company: “Residential real estate as an own asset class acts as a risk diversifier enhancing at the same time the portfolio return.”

“We have a business that was originally set up investing in residential and diversified into commercial,” said the company’s Andrew Pratt, speaking at the MIPIM UK event in mid October. Growth has led to Patrizia expanding its horizons, looking to the UK and the Nordic countries. “There was a desire from a number of our investors to diversify into a number of other countries in Europe. We’ve bought over £1 billion of assets since we’ve come into the UK.”

“We came into the UK in the early part of 2013 and started acquiring properties,” explained Pratt. “It’s quite interesting because not many people know of our business here.”

The company’s Anonio Marin-Bataller said no deals have yet been done to acquire UK residential property, but he indicated that several transactions are already in progress.

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.