Woningfonds MDH I.
Woningfonds MDH I. is a unique platform in the Netherlands for large private investors to invest in a diversified portfolio of newly constructed rental properties in the mid-segment. There is a large, growing demand for such rental accommodation. The rising shortage of rental housing in the mid-segment offers a favourable investment opportunity. The fund aims to achieve an attractive, stable and inflation-linked return by investing in the larger municipalities and urban areas in the Netherlands.
The mission of the Fund is to invest in newly constructed rental properties in the mid-segment in the Netherlands. The Fund aims to acquire new construction projects for the development of rental properties directly from project developers and construction companies. The initiator of the Fund has an extensive network among these groups. This enables the Fund to come into contact with developers at an early stage, facilitating the development of an adequate acquisition pipeline.
Mid-segment Rental Housing
The housing shortage in the Netherlands in 2017 was estimated at more than 150,000 homes (source: CBS). Although it is expected that the supply will increase in the coming decades, it will certainly lag behind the growth in demand over the coming years. The housing shortage is expected to peak in 2021, after which it gradually decreases. Supply and demand for housing in the Netherlands is not expected to be balanced until 2050 (source: Primos). There is a substantial mismatch between supply and demand, particularly within the mid-rent housing segment. This segment consists of dwellings with a monthly rent between € 710 and € 1,000. The size of this market segment is only around 4.6% of the total number of dwellings, but the demand for this type of housing has increased significantly in recent years as a result of:
Stricter income requirements, which deny people with incomes above approx. € 37,000 access to the social rental sector, as a result of which more people than previously are appointed to the mid-rent housing segment.
Higher prices in the owner-occupied sector combined with more stringent mortgage requirements, which have made owner-occupied homes a lot less accessible in the Randstad area, but also beyond.
Greater flexibility in the employment relationship, leading to more and more people, especially young people, not wanting to settle down to one place and/or owner-occupied home.
Growing number of seniors opt for rent.
Because of these developments, mid-segment rental properties in the Netherlands offer an attractive risk-return profile for real estate investors.
The current housing stock in the Netherlands consists of just over 7.77 million homes. The largest fraction (57.2%) of the houses are owner-occupied homes. The rental market consists of 42.8% of the total housing stock. Within the rental sector, a distinction is made between the social (or regulated) rental market with monthly rents up to a maximum of € 710.68 and the deregulated (free sector) rental market.
The deregulated market can be further divided into a middle segment with monthly rents of € 710 – € 1,000 and a higher segment with monthly rents of more than € 1,000. Housing associations own the largest part of the social segment and about a quarter of the deregulated segment. Commercial investors (both private and institutional) have about three-quarters of the deregulated market. On balance, only 4.6% of the Dutch housing market consists of mid-rent housing.
Housing division in the Netherlands in 2017. Source: ABF Research – Systeem woningvoorraad (Syswov)
Participation in the Fund offers investors an attractive risk-adjusted return. The stable financial return is partly due to inflation-adjusted cash flows and the expected increase in demand for mid-priced rental properties. Moreover, there is a low correlation with other asset classes.
All Fund documentation such as the Investment Memorandum, Terms and Conditions and Quarterly Reports are available for Participants in a secure online data room.
The Fund is a fund for joint account, organized and incorporated under Dutch law. The Fund aims for a minimum investment volume of approximately € 150 million. With the target debt set at of 65%, total equity will amount to approximately € 50 million. The Fund is open to potential new Participants. The Fund is only accessible to Professional Investors and the minimum size of a participation is in principle € 5 million.
The total life of the Fund is expected to be fourteen years, divided into a two-year investment period (with the option to extend one year) and a 12-year exploitation period (with twice the option to extend one year).
Please contact us if you want more information about the Fund or to request the Fund documentation..
|Fund||Woningfonds MDH I.|
|Duration:||Closed-end, in principle 14 years|
|Legal form:||Fund for joint account|
|Tax status:||Tax transparent|
|Leverage:||Target of 65%|
|Target size:||± € 150 million|
|Portfolio:||7 to 10 projects of 50-100 homes|
|Participation:||Minimum € 5 million|
|Manager:||Hartelt Fund Management B.V. (AIFM)|
|Fund Initiator:||Brink Financial Structures B.V.|
|Supervision:||Dutch Authority for the Financial Markets (AFM) and the Dutch Central Bank (DNB)|
Fund Initiator of Woningfonds MDH I is Brink Groep. Brink Groep consists of three companies with around 225 professionals. Since 1972 Brink Groep has been synonymous with grip on quality, process and end result in construction, housing and real estate. Brink Groep is at the heart of a group of companies, each with its own specialisation in management, consulting and IT. A part of Brink Management/Advise is engaged in financial engineering and real estate and focuses on, among other things, the housing market.
The Fund only invests in newly constructed homes. These homes will legally have to meet the strict energy performance requirements. The energy label has two positive effects. On the one hand, the portfolio is considered to have a premium quality compared to older portfolios with on average considerably lower energy labels. On the other hand, the higher energy labels will lead to relatively lower energy bills for tenants, which will further increase the relative attractiveness of the homes in the Fund’s portfolio. In addition, the Fund will annually participate in the GRESB assessment that measures the ESG performance of the Fund and strives for a ‘Green Star’ score. In addition, Hartelt has signed the PRI (Principles for Responsible Investment)