Heimstaden swoops on mammoth Dutch resi portfolio for €1.4b

Swedish investor Heimstaden has acquired a Dutch residential portfolio from investor-developer Round Hill Capital for €1.4 bn, making it the third-largest private property owner in the Netherlands.

The portfolio consists of 9,544 apartments across 536 properties, representing 793,000 m2 of living space plus 12,100 m2 of commercial space. The handover is expected to take place on May 1, 2019.

'After our first (Dutch) acquisition in October 2018, we dedicated ourselves to finding new potential deals,' said Christian Fladeland, CIO of Heimstaden. 'This portfolio gives us the opportunity to gain a position in a very favourable housing market with strong macro-economic fundamentals and a significant national shortage of apartments.

'Heimstaden will, based on its many years of experience in the Scandinavian countries, focus on upgrading the portfolio with ambitious investments in sustainability, but at the same time will continue to focus on the middle segment and reasonable rental levels.'

The 536 assets are spread geographically over the Netherlands with a concentration in the western Randstad urban agglomeration. The rental income amounts to approximately €76 mln annually and the net operating result is around €51 mln.

According to the firm, 'the Dutch rental property market is characterised by favourable fundamentals for housing compared to other countries, such as a larger housing shortage, annual rental indexation and higher average growth in market rents. The rental market is largely regulated, leading to rent increases above inflation'.

The Round Hill portfolio had been on the market since the autumn of 2018. It was initially rumoured that German investor LEG would become the new owner, but that deal fell through.

Round Hill established its residential investment and asset management platform in the Netherlands in 2014 and were amongst the first international investors to build a substantial portfolio of Dutch residential assets following the global financial crisis, Round Hill said.  

'This sale is in line with Round Hill Capital’s strategy of investing in high quality portfolios and improving the value of the underlying assets by optimising their operational performance,' commented Michael Bickford, founder and CEO of Round Hill Capital.

'Round Hill Capital remains committed to investing in, developing and managing residential property in the Netherlands in a responsible manner, and we look forward to expanding our presence in the Netherlands and across Europe.'

The deal with Heimstaden is taking place through the acquisition of subsidiaries owned by companies managed by Round Hill. Heimstaden said it was financing the deal through syndicated credit facilities amounting to €875 mln, a subordinated shareholder loan from Fredensborg of €100 mln, plus available cash.

'This acquisition offers Heimstaden a clear opportunity in a market with a strong base, which has been on the radar for quite some time,' said the firm's CEO, Patrik Hall.

Heimstaden is one of the largest residential real estate companies in Scandinavia and has around 100 employees. The company was founded in 1998 and taken over by Fredensborg in 2005.


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