Grainger and Moorfield unveil JV

UK listed residential property firm Grainger announced on Monday that Grainger Equity Release Limited (GERL) has entered into a 50-50 joint venture with a subsidiary of Moorfield Real Estate Fund II to run residential property company Sovereign Reversions.

Grainger completed the acquisition of Sovereign Reversions in June. The Sovereign Reversions business specialises in equity release investment, advice, plan provision and plan administration. The Sovereign Reversions property portfolio was valued at approximately £69 mln as at end-April 2010.

The joint venture will be managed by a board with GERL and Moorfield having equal board control, notwithstanding the number of directors appointed by each party. Grainger Equity Release Management will manage the assets on behalf of the joint venture, for which it will receive an annual management fee based on the prevailing Gross Asset Value which will lead to the transaction being earnings enhancing for Grainger. The transaction is expected to be NAV neutral for Grainger.

The Sovereign Reversions business will continue to operate as normal throughout the integration process following the acquisition and the creation of the joint venture. Both Grainger and Moorfield are firmly committed to the equity release sector and increasing the value of the existing portfolio of assets and, in time, will look into the possibility of acquiring further assets.

Following receipt of the approvals, GERL will receive a cash consideration of £17.5 mln from Moorfield for a 50% stake, representing 50% of the acquisition consideration paid by GERL for Sovereign Reversions. In addition, Moorfield will contribute an additional sum to GERL to cover 50% of the associated acquisition and integration costs. It is anticipated that the consideration received will be used by Grainger for general corporate purposes.