FTSE 250 residential landlord Grainger has created the GRIP unit trust to acquire a residential property portfolio worth 349.4m pounds.

The trust has been formed by Grainger and APG Strategic Real Estate Pool (APG), Europe's largest pension fund asset manager with €325bn of assets under management.

GRIP, whose aim is to grow by investing in market-let blocks and portfolios focused on Greater London, is to buy a portfolio from G:res, a UK market-rented residential property fund up for liquidation, in which Grainger owns a 26.2% equity stake worth £50.7m.

"In June 2011 G:res shareholders voted to progressively liquidate the fund, and today's announced transaction accelerates that process providing certainty to shareholders ahead of schedule," Grainger said.

APG is investing £158m in GRIP, while Grainger will co-invest £59m, made up of its proceeds from its G:res stake and £9.1m in new equity.

According to analysts at broker Jefferies on Tuesday, this as a "sensible transaction" for Grainger which "allows it to retain (and grow over time) its exposure to the private rented sector without gearing up, while growing its fee income stream."

Grainger will provide fund, asset and property management services to GRIP and will be paid management fees in line with those it would have received for G:res.

"We are delighted to be establishing this partnership with APG, one of the world's largest and most experienced institutional real estate investors, who are well known for long term, responsible investment," said Chief Executive Andrew Cunningham.

"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."

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