DeWAG in Duesseldorf
DeWAG both manages and develops residential properties.
A report by Bloomberg, citing four insiders with knowledge of the company’s dealings, suggests that the Stuttgart-based German residential real estate company DeWAG GmbH may be about to be sold by its American owners, the residential REITs Equity Residential and AvalonBay Communities Inc., in a move designed to take full advantage of the recent buoyancy of the sector.
DeWAG has had a chequered history in recent years, particularly for what would have been classified as a traditional German housing company, albeit with good quality assets and a widely-dispersed geographic base throughout Germany.
The company was majority-bought by US REIT Archstone in 2006 for about $650m as a European beachhead, when it then owned 6,100 apartments. Archstone itself then ended up being owned by Lehman Brothers, until being subsequently bought out earlier this year by US REITs Equity Residential, founded by the legendary Sam “The Gravedancer” Zell, and AvalonBay for about $6.5bn.
DeWAG is currently held in a real estate fund, in which Archstone holds a 16.46% stake, with the rest being owned by European pension funds and insurance companies. DeWAG both manages and develops residential properties, while the company’s portfolio includes more than 14,500 good-quality apartments in large western German cities including Wiesbaden, Cologne, Frankfurt and Munich. The company is valued at about €1.3bn. The potential buyer named by Bloomberg would be a fund created for German pension funds and insurance companies by Deutsche Bank Asset and Wealth Management (formerly RREEF), with a deal targeted for before year-end.
Equity residential has been on a selling spree in the US throughout this year, taking advantage of the low interest rate environment to package up non-essential assets before what it sees as an expected rise in interest rates. In the first nine months of the year, the company will have sold off $4.1bn of residential assets, and hence the German sale would fit into this pattern of disposals. CEO David Neithercut said recently, “An important driver of the Archstone transaction was the ability it provided us to accelerate the sale of so many of these non-core assets, and we’re very pleased that the market has been extremely receptive to our offerings.”