Deutsche Annington Immobilien AG, Germany’s largest residential landlord, plans to raise about 1.1 billion euros ($1.5 billion) in the second initial public offering in the country’s real estate industry this year.
Deutsche Annington will receive at least 400 million euros from the share sale to pay debt, the Bochum-based company said in a statement today. The shares will begin trading in Frankfurt on July 3 and will be priced from 18 euros to 21 euros, valuing the company at about 4.3 billion euros.
Deutsche Annington, majority owned by private-equity firm Terra Firma Capital Partners Ltd., is seeking new investors as demand for German real estate stocks is faltering. The FTSE EPRA/Nareit index of German property stocks has dropped 5.4 percent this year, after climbing 33 percent in 2012. The benchmark DAX Index has gained about 8.5 percent this year.
LEG Immobilien AG (LEG), a competitor formerly owned by Goldman Sachs Group Inc., raised about 1.3 billion euros in a share sale this year that was the largest in Germany’s real estate industry. The shares have dropped about 5 percent from the IPO price of 44 euros each.
Terra Firma owns about 85 percent of Deutsche Annington and Apollo Global Management LLC (APO) owns the rest, according to a Deutsche Annington statement on June 10.
Deutsche Annington owns 180,000 apartments in cities including Berlin and Cologne. Gagfah SA (GFJ), Germany’s second-largest landlord, has 144,000 apartments.
After the IPO, about 25.7 percent of Deutsche Annington will be publicly listed. That includes 22.2 million new shares issued in the capital increase and 27.4 million existing shares sold by the owners. As many as 7.4 million additional shares may be offered in the “over-allotment” option to cover extra demand, the company said.
Deutsche Annington plans to pay a dividend of 70 percent of funds from operations excluding asset sales. FFO is a measure of a company’s ability to generate cash.
“Sustainable growth, steady cash flows and dividend payments distinguish this industry,” Chief Executive Officer Rolf Buch said in the statement.
Deutsche Annington is making payments in Europe’s biggest restructuring of a commercial-mortgage backed security. A court in December gave the company more time to pay 3.8 billion euros of debt remaining on the German Residential Asset Note Distributor Plc, or GRAND, which was due to expire in July, according to investor documents on the company’s website. GRAND was valued at 5.8 billion euros when it was issued in 2006, making it Europe’s biggest corporate CMBS. Annington on June 10 said it plans to fully pay off GRAND by October.
To contact the reporter on this story: Dalia Fahmy in Berlin at email@example.com