Bouwfonds Investment Management (Bouwfonds IM) has successfully completed the sale of the first and by far the largest group of shares in the Bouwfonds Germany Residential Fund l to V. The buyer will acquire the portfolio with a new fund aimed primarily at German institutional investors. The total transaction value is a couple of hundred million euros.
Bouwfonds IM placed the BGRF series of funds between 2005 and 2008, to become one of the first Dutch investment managers to lay up funds with German residential rental properties. This move was triggered by research predicting an increasing shortfall in affordable rented homes in and around major German cities, assuming that a stable investment was likely. The series of funds, with an intended duration of at least ten years for each fund, was placed with Dutch private investors by Bouwfonds IM. The total property portfolio is made up of around 3,500 apartments spread across 50 properties in around 25 major German cities.
As well as acquisition, the asset management was done by one of the dedicated Bouwfonds IM teams in Berlin throughout the entire duration of the fund, in close collaboration with the Dutch fund management. This enabled the team to add value for the investors by developing the best possible exit strategy for the funds well in advance and by carefully preparing the sales process. Due to offering the five individual fund portfolios on the market together, a portfolio was created of a size attractive for institutional investors. Long-term participation in the IPD index made it possible to provide independent proof of the portfolio’s very stable performance from year to year. In late 2014, the appetite was tested of a select group of investors in order to investigate their interest in the sales structure and the property portfolio behind it. In 2015, a potential buyer was selected based not only on the price offered, but also with the flexibility and strength required to complete this share deal successfully.
In September 2015, the parties reached agreement in the form of two opposing option agreements. The buyer recently exercised its call option, as a result of which the purchase agreement has been effectuated. The process of delivering the shares will take place in the next few weeks.
Bouwfonds IM has chosen this complex transaction structure because it enabled the portfolios of the funds to be offered together, thereby taking maximum advantage of the favourable market conditions. Because the shares in the fund structure are being sold, there is no risk of properties in the funds remaining unsold or being sold at a later date. In addition, the transaction structure was very favourable for the largest group of investors from a tax perspective. Thanks to this transaction, the investors completed their investment with returns that can be qualified good to excellent.
The parties involved in assisting the vendor in structuring and implementing the transaction included: CT Legal, CBRE Capital Markets, Rechtstaete Amsterdam and Zuidbroek Notarissen Amsterdam and TMF Amsterdam. The vendor’s advisers included CMS and PWC.