Deutsche Wohnen Boosts Takeover Fightback With Dividend Rise

Deutsche Wohnen AG, the German residential landlord fighting a takeover bid by Vonovia SE, reported 2015 results more than two months early to say that profit rose 38 percent. The company plans to increase its dividend.

Funds from operations excluding disposals, a measure of a property company’s profitability, climbed to about 300 million euros ($327 million), beating its own forecast, Deutsche Wohnen said in a statement on Monday. Berlin’s biggest homeowner also increased its 2016 forecast and said it’s lifting its payout ratio to 65 percent of FFO from 60 percent previously.

The results emphasize the fact Vonovia is seeking to buy Deutsche Wohnen without paying a significant premium, according to Peter Papadakos, an analyst at Green Street Advisors in London. “It weakens Vonovia’s bargaining position and lowers the likelihood that the deal will go through,” he said.

Vonovia and Deutsche Wohnen, Germany’s biggest landlords, have been locked in a takeover battle since Vonovia made a 9.9 billion-euro hostile bid in October. The deal will succeed if investors in more than 50 percent of Deutsche Wohnen’s stock accept the offer by Jan. 26. Both companies, which are holding roadshows this week in a last-ditch attempt to win over shareholders, have been benefiting from rising demand for apartments in Germany’s largest cities and low financing costs.

As of Jan. 4, about 7 percent of investors had tendered their shares, according a statement on Vonovia’s website. Shareholders in hostile takeovers often submit their stock at the last minute in case there’s news to change their minds.

Deutsche Wohnen rose as much as 2.6 percent to 24.5 euros in Frankfurt, the most in almost a month. The company has a market value of 8.25 billion euros.

Deutsche Wohnen previously said FFO for 2015 would be as much as 290 million euros. FFO will rise by about 20 percent to at least 360 million euros this year, according to Monday’s statement.

“We exceeded our targets and we see ourselves in an excellent position for 2016,” Deutsche Wohnen Chief Executive Officer Michael Zahn said in the statement.

The company said net asset value climbed by 27 percent to about 23 euros per share last year. Deutsche Wohnen expects NAV to rise to as much as 26 euros per share by the end of 2016.

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