RESIDENTIAL landlord Grainger is setting up a £349m property fund in partnership with Europe’s biggest pension fund asset manager.
The GRIP unit trust will be launched in partnership with APG Strategic Real Estate Pool (APG), which manages £273.5bn of assets.
It was formed to acquire the £349.4m residential property portfolio G:res, which Grainger set up in 2005 and in which it owns a 26.2% stake worth £50.7m.
G:res is currently returning cash to shareholders, and Grainger will invest its money from the fund into GRIP, plus a further £9.1m of new equity, while APG will invest £158m.
The new partnership will buy stable, market-let blocks and portfolios mainly in the Greater London area, but it will also look to invest in new build to rent development opportunities.
GRIP, which will be managed by Grainger in return for fees, is also looking to recruit one or two other institutional investors interested in growing the fund further.
Grainger chief executive, Andrew Cunningham, said: “We are delighted to be establishing this partnership with APG, one of the world’s largest and most experienced institutional real estate investors, who are well known for long-term, responsible investment.
“We see APG’s commitment as a clear acknowledgement of UK residential property’s growing appeal as an institutional asset class, as well as a significant endorsement of Grainger’s expertise in the UK residential sector and the strength of our operational platform. We look forward to working with APG to drive long-term value within GRIP.”
Robert-Jan Foortse, APG head of European real estate, said: “APG has a long history of investing in residential real estate.
“We believe prospects for the Greater London rental market are promising, and we are enthusiastic about adding this exposure to our portfolio.
“APG has been a shareholder in Grainger plc for several years and we are pleased to expand our relationship with Grainger via this partnership.
“This transaction demonstrates our willingness and aptitude for working with investment managers to modernise, recapitalise and extend the life of existing vehicles owning good-quality real estate.”
Grainger said this was a “significant milestone” in this strategy of growing its fund and third-party asset management business and associated fee income.