(Corrects currency conversion in second paragraph.)
Grainger (GRI) Plc, the U.K.’s largest publicly traded residential landlord, and a unit of asset manager APG agreed to buy a residential property portfolio for 349.4 million pounds ($554 million).
APG, Europe’s largest pension fund asset manager with 325 billion euros ($434 billion) under management, will invest 158 million pounds in GRIP, a trust set up to buy the G:res1 property portfolio, Grainger said in a statement today. The U.K. company owns a 26.2 percent stake in the portfolio and will invest the capital raised from its sale and an additional 9.1 million pounds in GRIP.
GRIP will focus on renting out properties in greater London and may also invest in developing homes for leasing. London rents rose 6 percent in the year through October, according to an index compiled by HomeLet. The G:res1 portfolio was set up by Grainger in 2005.
“Prospects for the greater London rental market are promising,” Robert-Jan Foortse, head of European real estate at Heerlen, the Netherlands-based APG, said in the statement. “This transaction demonstrates our willingness and aptitude for working with investment managers to modernize, recapitalize and extend the life of existing vehicles owning good quality real estate.”
The new fund will be renewed every five years. It will seek additional equity from financial institutions to allow additional home purchases.
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