Round Hill Capital has entered the Czech residential market by buying a 43,000-unit portfolio that failed to IPO last year due to the stock market turmoil caused in part by the Ukraine crisis.
Round Hill Capital has entered the Czech residential market by buying a 43,000-unit portfolio that failed to IPO last year due to the stock market turmoil caused in part by the Ukraine crisis.
Round Hill announced on Tuesday that it is acquiring RPG Byty, the largest privately owned rental residential real estate company in the Czech Republic, and facility manager RPG Sluzby. The financial details of the transaction were not disclosed but PropertyEU reported last year that the company had a net asset value of about €500 mln.
RPG owns 43,083 residential units with a total area of 2.6 million m2 concentrated in Ostrava, the former coal and steel heartland of the Czech Republic.
The vendor was BXR Group, the Amsterdam-based investment company in which Czech billionaire Zdenek Bakala holds a 50% non-controlling stake.
The Soviet-era homes were built to house miners and the RPG portfolio was created in 2006 as a spin-off from Czech mining group OKD. Martin Ráž and Pavel Klimeš, joint CEOs of RPG, began a refurbishment and optimisation process, involving €280 mln of capital expenditure, to bring the portfolio up to the level of an institutional-grade investment and drive rent increases.
The portfolio has been controversial as centre-left politicians and local people have called for the homes to be sold directly to the tenants at a discount rather than to an investor.
The company was briefly renamed Domus in 2014 ahead of a planned listing in Amsterdam. The IPO was abandoned in May of that year due to the geopolitical unrest caused by the Ukrainian crisis and general stock market instability.
From West to East
Round Hill is a global asset and investment manager active in the commercial and residential property sectors, and student housing investment, in Europe. It is best known for investing in and managing a total of 55,000 residential units in Germany, the UK and more recently, the Netherlands. The RPG acquisition marks the investor’s entry into the residential market in the Czech Republic.
Pavel Klimes, co-CEO responsible for operations at RPG Byty, added: 'During the last 10 years, the portfolio of RPG Byty has been substantially refurbished, delivering a materially better living experience to our tenants, and we have created an efficient management business to lease and maintain the properties. We are pleased that it has been agreed to sell the entire portfolio to Round Hill, an established residential investor and manager and we are confident they will be a reliable landlord for the tenants.'
RPG has €400 mln in outstanding bonds used to finance the refurbishment programme. The bonds are due to 2020.
