Grainger has teamed up with APG Strategic Real Estate Pool (APG) to create a £349 million residential property fund.
The Grip fund will see Grainger, the UK's largest listed landlord, and APG, Europe's largest pension fund asset manager, acquire G:res, a residential property fund established and managed by Grainger since 2005. Grainger owns 26.2% of the equity in the fund worth around £50.7 million.
In June 2011 G:res shareholders voted to progressively liquidate the portfolio.
The partnership between Grainger and APG will accelerate the process. APG will invest £158 million in GRIP and Grainger £59 million, comprising its proceeds from its stake in G:res and an additional £9.1m of new equity.
The vehicle is structured as a long term fund with five year renewable terms and will be seeking additional equity from one or two more institutional investors.
In its new form Grip will invest in predominantly stabilised, market-let blocks and portfolios focused on Greater London. It will also have scope to invest in Build to Rent development opportunities. Grainger will be responsible for the investment decisions through a team led by Michael Lamyman.
GRIP, which is structured as a long term fund with five year renewable terms, will be seeking additional equity from one or two other like-minded institutional investors to grow the fund further.
In a statement to the stock exchange Grainger chief executive Andrew Cunningham said: 'We see APG's commitment as a clear acknowledgement of UK residential property's growing appeal as an institutional asset class, as well as a significant endorsement of Grainger's expertise in the UK residential sector and the strength of our operational platform. We look forward to working with APG to drive long term value within Grip.'
APG head of European real estate Robert-Jan Foortse added: 'We believe prospects for the Greater London rental market are promising and we are enthusiastic about adding this exposure to our portfolio.'
'This transaction demonstrates our willingness and aptitude for working with investment managers to modernise, recapitalise and extend the life of existing vehicles owning good quality real estate.'