APG partners with Grainger to buy $554 million portfolio

A unit of APG, Europe’s largest pension fund money manager with €325 billion ($434 billion) under management, will invest £158 million ($248 million) in GRIP, a trust set up to buy a residential property portfolio, Grainger said in a statement Tuesday.

APG Strategic Real Estate Pool and Grainger, the U.K.’s largest publicly traded residential landlord, agreed to buy the G:res1 property portfolio for £349.4 million ($554 million). The U.K. company owns a 26.2% stake in the portfolio and will invest the capital raised from its sale and an additional £:9.1 million in GRIP.

GRIP will focus on renting properties in greater London and might also invest in developing homes for leasing. London rents rose 6% in the year through October, according to an index compiled by HomeLet. The G:res1 portfolio was set up by Grainger in 2005.

“Prospects for the greater London rental market are promising,” Robert-Jan Foortse, head of European real estate at Heerlen, Netherlands-based APG, said in the statement. “This transaction demonstrates our willingness and aptitude for working with investment managers to modernize, recapitalize and extend the life of existing vehicles owning good quality real estate.”

The new fund will be renewed every five years. It will seek additional equity from financial institutions to allow additional home purchases.

APG is the fiduciary manager of the €274 billion Stichting Pensioenfonds ABP, also of Heerlen.