Vesteda acquires €1.5 billion Dutch residential real estate portfolio from NN Group
Dutch residential real estate investor Vesteda today announces that its Participants unanimously approved the acquisition of a €1.5 billion Dutch residential real estate portfolio from financial services company NN Group. The purchase price will be paid for the most part in equity and for the remainder in cash. Completion of the transaction is expected before the end of this month. The transaction perfectly fits Vesteda’s strategy of achieving profitable growth while improving its portfolio and profile towards its tenants, employees and investors.
The transaction encompasses an asset deal consisting of an existing residential portfolio and a pipeline of new housing projects. The standing portfolio immediately generates rental income and is highly complementary to the current Vesteda portfolio in terms of quality, geographical locations and rental segments. The pipeline of new housing projects is concentrated in the mid-rental segment and located in economically strong regions. Both the standing assets and pipeline assets are part of the former Delta Lloyd Dutch residential portfolio.
Scope of the transaction:
- 6,777 residential units, representing a total value of €1,509 million, of which:
- 5,983 existing units, representing a total value of €1,295 million
- 794 pipeline units, representing a total value of €214 million
- €1,080 million paid in newly issued participation rights
- €429 million paid in cash (including instalments to be paid for pipeline projects) from existing facilities and new debt
Gertjan van der Baan, CEO Vesteda: “A transaction of this size is unique in the Dutch housing market. We are extremely delighted with the confidence that NN Group has placed in Vesteda by contributing the former Delta Lloyd residential portfolio to Vesteda and increasing its stake in the fund.
The addition of this portfolio to our existing portfolio strengthens our presence in attractive locations, broadens our housing offering and improves our returns. We will enlarge our offering in the mid-rental segment and strengthen our exposure to core regions. In addition, we will grow the weight of the single-family houses in our portfolio. This transaction will also provide us with operational cost efficiencies and decreases our Total Expense Ratio (TER).”
After completion of the transaction, Vesteda’s standing portfolio will consist of approximately 27,000 residential units representing a value of €6.3 billion. The combined acquisition pipeline will consist of more than 2,500 residential units representing a value of approximately €750 million. Including the acquisition pipeline, Vesteda’s portfolio includes approximately 30,000 residential units, representing a value of around €7 billion.
To maintain its sustainability ambitions, Vesteda aims to upgrade the sustainability profile of the acquired standing portfolio. The average age of the assets in the portfolio is slightly higher than Vesteda’s portfolio and bringing the portfolio up to Vesteda’s sustainability standards requires efforts similar to Vesteda’s existing upgrading programme. To come to the desired energy labels, Vesteda envisages to additionally invest a total of €31 million in the acquired portfolio until the end of 2020. By then, at least 80% of Vesteda’s homes will have an energy label A, B or C and no more than 20% of Vesteda’s homes will have an energy label D.
In order to finance the cash portion of the transaction, Vesteda has arranged a bridge facility, which will be taken out by long-term debt instruments in due course.
Kempen acted as sole financial advisor, JonesLangLasalle as commercial advisor, Allen & Overy LLP, Buren Legal and Loyens & Loeff as legal advisors and EY as a tax advisor for Vesteda in this transaction.
Vesteda is an entrepreneurial investor with a clear focus on the Dutch residential real estate market. Vesteda invests funds for institutional investors such as pension funds and insurers. Vesteda has total capital of €5.0 billion invested in real estate. Its rental portfolio stands at a total of approx. 20,750 residential units. After completion of the above announced transaction, Vesteda’s rental portfolio will consist of approximately 27,000 residential units representing a value of €6.3 billion (excluding pipeline). Vesteda’s key investment regions are the Randstad region and the Brabant metropolitan area.