Deutsche Annington Immobilien SE is buying Suedewo Group for 1.9 billion euros ($2.1 billion), including debt, from funds managed by Patrizia Immobilien AG to consolidate its position as Germany’s largest property company.
Deutsche Annington will issue about 2.25 billion euros of new shares to pay for the deal, the Bochum-based company said in a statement Sunday. Suedewo owns 19,800 apartments, mainly in the southern state of Baden-Wuerttemberg. Deutsche Annington will pay 1.1 billion euros for the company and take on 800 million euros of debt.
“In the highly fragmented German market for rented housing, we are availing of another opportunity to strategically expand our nationwide position,” Deutsche Annington Chief Executive Officer Rolf Buch said in the statement. The capital increase will hurt the company’s funds from operations per share, he said on a conference call Monday.
Deutsche Annington owns about 350,000 homes in Berlin, Cologne and other large German cities. The company has been expanding rapidly since its initial public offering in 2013. Earlier this year it bought Gagfah SA for 3.9 billion euros in the country’s biggest-ever property deal.
Deutsche Annington fell more than 6 percent, the most in more than a year, to 26.06 euros in Frankfurt at 9:35 a.m.
The new Deutsche Annington equity will be offered to shareholders, enabling them to acquire three shares for every 10 they own. About 1.9 billion euros will be used to pay for Suedewo and the rest will be used to repay loans and cover transaction costs, Deutsche Annington said in the statement.
Patrizia raised its forecast for the current and next fiscal years based on the transaction. The combined operating result for the two years will be at least 200 million euros, it said in a separate statement.
The Suedewo deal is expected to close in July.