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IPE special report May 2018

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APG increases Vesteda stake as institutions eye Dutch housing

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APG is increasing its stake in Vesteda and likely to be among investors taking advantage of deregulation in the Netherlands to snap up housing assets.

The Dutch pension fund asset manager will close on a deal on Monday to increase its €1.05bn interest in the housing fund by a further €30m.

Patrick Kanters, managing director of global real estate and infrastructure, told a delegation in London this week that APG was looking to make further investments in Dutch housing, potentially through other platforms.

Kanters, who was speaking at a Holland Property Plaza Symposium at the Dutch Embassy, said APG could look to invest in private-rented residential (PRS) being offloaded by housing associations.

There is renewed attention on the Dutch residential market after prices started to recover, and the government has sought to shake up a rental market long dominated by housing associations.

New rules introduced in January are expected to force housing associations – which control approximately 90% of the rented sector – to focus on social housing and open the PRS sector to private and institutional investors.

The regulated rented sector – where rents are controlled – has been largely liberalised for tenants paying €700 and above per month.

Mark Frequin, director-general for housing and building, told delegates the changes were part of a number of measures intended to liberalise the PRS sector in the Netherlands.

Wienke Bodewes, chief executive at Amvest, which manages a number of institutional residential funds in the Netherlands, said there were some 400 housing associations.

“The challenge will be to form new portfolios” for institutional investors, he said, because many of the housing associations are small, and portfolios coming to the market could be fragmented.

It was also noted during discussions that some housing associations might sell social housing assets, potentially in “packages” mixed with non-regulated assets.

Bodewes said most investors would focus on core and core-plus residential investments, but he said there could also be an opportunity for value-added strategies in this area.

He said this would be “the exception”.

When asked, Kanters did not rule out APG investing in the regulated part of the rental market, although he said social housing assets were more challenging to underwrite and any investment would need to compensate APG for the added risk.

APG has recent experience of investing in a mixture of regulated and non-regulated rental assets in Finland, having bought a 22.8% stake this year in Finnish company SATO.

It has been building up its exposure to the UK PRS sector, investing in existing assets through Grainger and providing capital for Delancy to develop new homes.

It has also been providing construction financing for PRS through LaSalle Investment Management.

Kanters said APG was seeking to increase its 18% weighting to residential real estate to meet its target allocation of 25%.

A spokesman confirmed APG would close on a deal on Monday to increase its stake in Vesteda.

The portfolio of Vesteda used to be owned directly by ABP – the largest pension fund in the Netherlands and APG’s biggest client – before it sought to become an entirely indirect investor.

APG’s latest investment marks a reversal of its strategy to decrease its stake in Vesteda.

The spokesman said: “We are looking into making further investments in the Dutch residential sector.”

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