Netherlands remains a no-go for all but most careful stock pickers

Parts of the Dutch market are in severe distress: the Netherlands endured a banking crisis and has been shunned by its large pension fund investors, while there is a lot of oversupply outside the prime office and retail districts, writes Lauren Parr. “There is potential to secure attractive yields in one of Europe’s most flexible economies,” says Benson Elliot managing partner Marc Mogull. “But any bombed-out market is a ‘handle with care’ situation… a mediocre growth outlook means it’s not a recovery situation where all ships will float; it’ll be a stock picker’s market.”

There are opportunities to buy from liquidating German open-ended funds. AXA Immoselect sold six secondary offices and a retail property at a 40% discount to Czech real estate investor PPF Group last summer. Soon afterwards, Fortress bought the Project Vermeer CRE loan portfolio from Morgan Stanley. The 65 underlying properties included 35 in the Netherlands and were once owned by Fordgate.

Blackstone recently took over Dutch mall developer Multi Corporation by buying into its €900m corporate debt and also bought six office buildings from the CBRE Dutch Office fund at the end of December. Keith Breslauer, Patron Capital’s managing director, says: “Few opportunity funds have really been looking at the market because it’s too small or even if they fix a situation there is limited liquidity.” Patron took control of distressed Dutch company Uni-Invest in 2012. “It’s doing pretty well [although] I wouldn’t call it a home run,” Breslauer says. “Buying 200-plus buildings with significant vacancy was incredibly difficult. [The portfolio] has good income but there is enormous competition for tenants.”