LEG Raises 1.3 Billion Euros in Germany’s Largest Property IPO

LEG Immobilien AG, a German apartment landlord, raised about 1.3 billion euros ($1.8 billion) in an initial public offering, becoming Germany’s largest publicly traded property company by market value.

LEG, controlled by Goldman Sachs Group Inc. (GS), finished marketing its IPO today for 30.5 million shares priced at 44 euros apiece, according to a statement by LEG. That amount includes the so-called over-allotment option to cover extra demand.

That puts LEG’s market value at 2.33 billion euros, higher than Deutsche Wohnen AG (DWNI)’s 2.28 billion euros. The IPO, Germany’s first of the year, is also the largest in the country’s property industry.

Goldman Sachs, which bought the company for about 3.5 billion euros including debt in 2008, is seeking to profit from a boom in German residential real estate. The FTSE EPRA/Nareit index of German property stocks has gained 35 percent in the past 12 months.

The stock will begin trading in Frankfurt tomorrow under the ticker LEG. The company originally said it would price its shares at 41 euros to 47 euros.

LEG owns 91,000 apartments in North Rhine-Westphalia, Germany’s most populous state. Goldman Sachs’s Whitehall Street Real Estate fund holds about 95 percent of the company. Perry Capital owns the rest.

Goldman Sachs and Deutsche Bank AG managed the sale.

Hot Market

Deutsche Annington Immobilien AG, Germany’s largest owner of apartments, also plans an IPO this year. Annington, controlled by Guy Hands’s Terra Firma Capital Partners Ltd., has about 186,000 homes.

Gagfah SA (GFJ), which is controlled by Fortress Investment Group LLC (FIG) and has about 145,000 apartments, is the largest publicly traded residential landlord by properties.

LEG’s profit from its main business of renting apartments was 243 million euros in 2011 and its funds from operations were 111.8 million euros, according to its last annual report. FFO measures a property company’s ability to generate cash.

By comparison, Gagfah generated rental income of 419.6 million euros in 2011 and its FFO was 159.5 million euros, according to its annual report.

Active Investor

Goldman Sachs is one of the most active foreign investors in the German real estate market. In April 2011, Whitehall Street and Cerberus Capital Management LP raised 468 million euros in an IPO of Berlin-based residential landlord GSW Immobilien AG. (GIB)

Whitehall Street also made an unsuccessful bid to buy Baubecon, the residential property portfolio that Barclays Plc (BARC) agreed to sell to Deutsche Wohnen AG in May in a deal valued at 1.24 billion euros. Whitehall Street agreed to sell its stake in 17 German department stores, including Kaufhaus des Westens, the country’s largest, in December.

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Dalia Fahmy in Berlin at dfahmy1@bloomberg.net

To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net

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