Canadian Apartment Properties Real Estate Investment Trust, Canada’s largest residential landlord, leads the second round bidders for Danske Bank’s direct residential and development property portfolio, dubbed Project Circle, among a five-strong shortlist.
CoStar News understands that CAPREIT, which announced its intention to list Ireland’s third REIT last Friday, is competing with separate bids from Deutsche Bank and Oaktree Capital Management as well as up to two additional investors.
Pricing is thought to have come in around Danske Bank’s targeted €80m guide price.
Project Circle, which is comprised of almost 600 individual homes and a small number of development plots across two separate tranches, came to market in early March (see second story) and drew considerable first round interest with investors seeking to capture the emerging recovery in Ireland’s residential market.
Within Project Circle is a circa 50% geographic concentration of assets in the Greater Dublin area, with smaller weightings in Galway, Limerick and Cork.
Second and final bids are due in the second week of May. Danske Bank’s non-core Irish commercial property loans are managed by Pepper Asset Services.
All parties declined to comment.
Last Friday CAPREIT announced that its wholly-owned Ireland subsidiary, Irish Residential Properties REIT (IREIT), intends to seek a primary listing and raise gross proceeds of €200m.
CAPREIT Limited Partnership, a wholly-owned subsidiary of CAPREIT, will, indirectly through an intermediary vehicle, subscribe for up to 10% of the offering equating to €40m. Franklin Templeton Institutional has already signed up as a cornerstone investor, agreeing to subscribe to €25m in ordinary shares.
IREIT aims to capitalise on the improving economic conditions and demographic trends, a lack of significant historical institutional ownership in the residential property rental market and the potential for significant asset sales by banks, NAMA among other vendors.
The CAPREIT-backed residential property company first launched in September 2013 when it acquired a 338-unit residential portfolio across four properties in the greater Dublin for €42.4m, excluding acquisition costs, against to €45.49m end of December-dated valuation by CBRE.
CR Fund Management is IREIT’s asset and property manager.
IREIT is seeking to build a “portfolio of diverse properties across the affordable, mid-tier and luxury accommodation sectors in Ireland” through capitalising on internal growth and “accretive acquisition opportunities” in greater Dublin area and other major urban cities.
The pre-tax total shareholder return target is between 10% and 15% per annum when fully invested with an annual dividend yield of 4.5-5%.