Patrizia buys Dutch resi portfolio for €578m

German property company Patrizia Immobilien has acquired a residential portfolio in the Netherlands for €578 mln from Dutch housing association Vestia. The deal is the largest ever in the Dutch housing market.

The portfolio comprises around 5,500 residential units and has been acquired for Patrizia's co-investment WohnModul I fund which includes a large German pension fund as participant.

The purchase agreement is still subject to the approval of various bodies on the seller side. 'We expect the sale to be approved by all bodies and the transaction to be closed on schedule at the end of the financial year,' said Patrizia’s COO Klaus Schmitt.

The deal is part of Patrizia's strategy of becoming Europe’s leading real estate investment company. The Augsburg-based company, which manages around €13 bn of assets in Europe, recently emerged as the fastest-growing real estate investment manager in PropertyEU's ranking of Top 100 Investors in Europe. ‘For some time now, our institutional investors have had such confidence in us that they are investing with us outside their familiar national borders,’ Schmitt said. ‘We have created the requisite conditions for this with our many years of experience and our European network of subsidiaries,’ he added.

‘This sale is the biggest transaction that the Dutch market has ever seen in the housing sector,’ said Arjan Schakenbos, executive board chairman at Vestia. ‘We are delighted to have found a renowned partner in Patrizia that will remain invested in the acquired properties in the long term and will also take on our current employees who have been looking after the property management of these properties.’

Vestia was advised on the deal by Capital Value and legal firm Houthoff Buruma.

European expansion
The deal, Patrizia’s first in the Netherlands, had been anticipated since the company opened a Dutch office earlier this year. ‘A couple of years ago we set ourselves a goal to enter five core markets in Europe - and the Netherlands is the last remaining country on that list,' Wolfgang Speckhahn, Patrizia's head of strategy and corporate development told PropertyEU in March.

During the first quarter of 2014 Patrizia poached ING REIM's managing directors in France, while last year it made an entry into the UK with the purchase of London-based real estate investment and asset management company Tamar Capital Group. The company is also seeking to enter the Spanish market and already has a presence in Luxembourg and the Nordics, with operations in Denmark and in Sweden.

Patrizia has been active as both an investor and service provider in European real estate for 30 years. The company acts primarily as a co-investor and portfolio manager for insurance companies, pension fund institutions, sovereign wealth funds and savings banks.

Ailing corporations
The Vestia portfolio has been up for sale since March. The disposal of the 5,500 housing units is part of the ailing Dutch housing corporation’s plans to reduce its number of rental units from over 96,000 to around 65,000 in a bid to return to financial health.

Vestia is not the only housing corporation looking to offload assets. Recent legislative reforms in the Netherlands mean that the country’s social housing corporations can now sell off large portfolios, which are attracting strong interest from foreign investors. Dutch housing fund WIF has also put nearly 3,900 housing units in both the regulated social and liberalised market sectors up for sale. WIF has invited bids for the portfolio, with the deadline for offers set at 3 September.

Besides Patrizia, other investors looking keenly at the Dutch residential market include Swiss-based Corestate Capital, Germany’s Deutsche Annington and UK-based Round Hill Capital. Round Hill has already spent €180 mln on Dutch residential assets in its first deal announced in June.

‘Now is the time to step into the Dutch [residential property] market,’ Klaus Weber, head of transactions at Patrizia Immobilien, told a PropertyEU briefing at the Dutch Provada fair in June. Government reforms, coupled with a housing shortage, low inflation and population growth in the major cities made the Dutch market an attractive bet, he said.