Benson Elliot sells back Gera housing unit to State of Thuringia at sizeable profit

In a deal which will be watched with interest by other foreign investors in German housing associations, the UK private equity fund manager Benson Elliot, acting on behalf of its pan-European fund Benson Elliot Real Estate Partners IV (BEREP IV) has sold its 74.9% stake in GWB Elstertal Geraer Wohnungsbaugesellschaft (GWB) to an affiliate of Thüringer Aufbaubank, a public entity controlled by the German State of Thuringia. The price was put at about €175m.

Benson Elliot acquired the majority stake of GWB in August 2016 following the effective insolvency of the state utilility Stadtwerke Gera. At the time, the communal housing company owned and managed a portfolio of about 6,700 residential units, encompassing 402,000 sqm across 330 assets, in Gera, the third-largest city in the state of Thuringia in central Germany. The City of Gera holds the remaining 25.1% stake in the housing company.

The state of Thüringia will fund the acquisition from a special reserve fund which has about €400m, of which about €200m is available, according to Klaus Sühl, the state’s Minister for Infrastructure.

The deal is in effect a re-nationalisation of what used to be communally-owned properties in Gera before Benson Elliot bought them, a mere three years ago. The climate for privatization of residential property has changed significantly since then, spearheaded by activists in Berlin who are threatening to expropriate property owners with more than 3,000 apartments in the city, foremost among them the listed property manager Deutsche Wohnen.

Thüringen’s minister-president is Bodo Ramelow, the leader of the hardleft party Die Linke and an ex-Communist. He himself pronounced on the Benson Elliot sale that, “By taking over the shares owned by Benson Elliot we are able to prevent about 5,000 apartments from becoming objects of financial speculation.” Ramelow leads a government coalition of Die Linke, the left-of-centre SPD, and the Greens. The opposition parties CDU and the hardright AfD were against the state takeover of the apartment package.

Since acquisition, under Benson Elliot’s oversight GWB’s portfolio has been improved significantly, through the introduction of best-in-class leasing and operational management processes to refurbish and lease the core residential properties. Non-core and obsolete holdings were disposed of, and a comprehensive portfolio refinancing was completed with Landesbank Baden-Wurtemburg.