There was little indication at a recent presentation in Berlin by Deutsche Annington’s CEO Wijnand Donkers that he himself would not be around to accompany Annington’s proposed imminent IPO – but that will be the case, after the company made a surprise announcement last week that Donkers has stepped down, while the company has started an immediate search for his replacement.
Deutsche Annington had recently been visibly ramping up its plans to take advantage of favourable stock market conditions and investor hunger for exposure to the German residential housing market, and launch its stock market flotation - perhaps as soon as the fourth quarter of this year. Listed residential property companies in Germany such as GSW, Gagfah and Deutsche Wohnen have seen the discount of their share prices to net asset values narrow sharply over recent months, while rights issues by companies such as GSW and TAG Immobilien had been warmly received by investors.
The Bochum-based Deutsche Annington is owned by UK private equity investor Terra Firma. With 210,000 residential units under management, of which 185,000 are owned by itself, the company is Germany’s largest private landlord with its portfolio valued at €9.9bn. It recently incorporated itself as a public company and changed its legal status to that of a European Societas Europaea, and in July agreed terms with its noteholders for a substantial five-year refinancing plan for its €4.4bn CMBS securitisation. Total debt stands at €8.5bn, giving an overall loan-to-value ratio of 67%. CEO Donkers recently said that the IPO would prove viable if it could reduce the loan-to-value ratio to 60% or lower.
The bulk of Annington’s residential properties are located in Berlin, Frankfurt and Dortmund. Berlin makes up about a third of the volume, and the city is currently seeing rental increases of about 20% on new leases signed, putting it at the top among Germany’s larger cities.
Donkers is being replaced temporarily by Robbie Barr, the deputy head of Deutsche Annington’s supervisory board and also the COO of Terra Firma, while it seeks a replacement “to lead the company into its IPO and beyond”, says Annington.
Insiders close to Deutsche Annington suggest that Donkers came off worst in a power struggle with finance director Stefan Kirsten, who joined the company from a high-profile similar position at listed steelmaker ThyssenKrupp and played a leading role in the recent refinancing, which will have given him an enhanced profile among his financial peers, given the difficult refinancing climate. Donkers’ plans to centralise much of Annington’s property management in its far-flung locations through IT and call-centre operations, and the downgrading of up to 1,000 local hands-on ‘hausmeister’ in favour of a specialised central problem-solving unit, were among measures judged by many company insiders to have worked poorly and failed to achieve the targeted cost savings.