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German homes appeal to Grainger

Created:

4 February 2008

Written by:

Claer Barrett

Grainger , the regulated residential landlord, has increased its exposure to the German rental market by acquiring a controlling stake in FranconoRheinMain AG, emphasising that property professionals still see value in some European markets.

Grainger bought 54 per cent of the shares at €1.50 a share, and will acquire the remainder through a tender offer at up to €1.80, taking the total consideration to almost €46m (£34.5m). FranconoRheinMain has net assets of €49.8m, and reported pre-tax profits of €8m in September. The market value of its property portfolio, comprising apartments and houses in the Rhine region, is €117m.

When completed, the deal will boost Grainger’s German portfolio by nearly 50 per cent, rising to 6,800 residential units with a market value approaching €500m. Grainger's director of corporate development, Quinton Hill-Lines, said that the company hopes to double the size of its German holdings to €1bn in the next two years: "German residential property offers better value than most other European countries," he said. "[The price paid] is less than the cost of building new units, and we are looking closely at other portfolio purchases and corporate transactions."

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