London-headquartered investor-developer and asset manager Round Hill Capital has confirmed it is hunting for further deals in the Netherlands and beyond after selling €1.4 bn of Dutch residential assets to Swedish investor Heimstaden.
‘We sold now, because that was within the terms of the business plan that we agreed with our investors for this Dutch residential strategy,’ said Sander van den Heuvel from Round Hill’s investment team in the Netherlands. ‘But we absolutely remain committed to making further investments in the Netherlands and for the long term.
‘In June 2014, when we made our first Dutch residential acquisition – 1,500 units from CBRE Global Investors – we settled on a five-year business plan, which took us up to around this time.
‘After that first deal, we completed another 19 acquisitions in the Netherlands, reaching around 20 deals in all. They ranged from around 200 units to over 3,000 units per transaction. We struck the last deals in early 2018, bringing us up to around 11,500 units in total. We then divested a few properties, before selling the remaining 9,500 units to Heimstaden,’ Van den Heuvel explained.
The portfolio sold to the Swedish investor consists of 9,544 apartments across 536 properties, representing 793,000 m2 of living space plus 12,100 m2 of commercial space. 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 both parties, the handover is expected to take place on May 1.
Netherlands focus
Van den Heuvel confirmed that Round Hill’s Dutch strategy would continue to encompass further residential investments, plus other assets in the broader ‘living’ segment.
‘Last last year we launched two other joint ventures in the country,’ Van Den Heuvel said. ‘One is focusing on student housing, while the other is focusing on residential development. We will continue to keep investing in standing residential investments as well.
‘We think residential is a very stable and risk averse asset class, where one can grow rents steadily in line with inflation,’ he added. ‘Large parts of the portfolio we just sold were social housing - which has stable and predictable cashflows. Residential property allows for a hands-on, responsible business plan - we think that with our long and successful investment track record and operational expertise we can make improvements for the tenants and investors by carefully managing those assets. We also transfer all the expertise that we gain in other jurisdictions and apply it in new jurisdictions, so that all of our tenants and investors benefit from the lessons we learn across all our other platform investments.’
Student housing
Round Hill was ahead of the curve in terms of student housing investments when it acquired the Nido Student Living portfolio in London in 2012 from the Blackstone Group. This 2,500-bed portfolio proved the first in a line of many investments in the asset class, according to Van den Heuvel.
‘Ever since then, we’ve been continuing to expand that across the UK and Europe. In 2017, we acquired another large portfolio in the UK, and in 2018 we acquired our first two development schemes in the Netherlands. We’re currently looking to expand further in the student housing sector across Europe, throughout Spain, Portugal, Germany, Italy and Ireland - driving our growth across Europe and into wider international markets, but also into other related asset classes, such as co-living.’
The recent deal with Heimstaden underlines the significant investor interest in these kinds of assets, Van den Heuvel said. ‘There was strong interest in the portfolio,’ he said. ‘We still see lots of parties interested in residential in the Netherlands in general; but what we do see is a shift from a more value-add strategy to a more core strategy. Shorter term business plans are now being replaced by longer term business plans. And that’s connected with the stage in the cycle that we’re currently at,’ he concluded.
