Berlin specialist Ado Properties in €400m IPO this year

The Berlin-based Ado Properties SA, a value-add residential real estate investor focused on the German capital, plans to raise at least €400m in an initial public offering this year.

Ado, whose parent company Ado Group Ltd. is already traded in Tel Aviv, will sell shares on the Prime Standard of the Frankfurt exchange, Ado said, pitching itself as a pure-play Berlin specialist. The company owns about 13,700 homes and 700 commercial properties in Berlin valued at €1.2bn, following a recent major buy of 5,750 further residential units from Deutsche Wohnen for €375m.

Demand for German property stocks is rising as investors seek to take advantage of increasing home values in Europe’s largest economy. Berlin apartment prices have climbed almost 50% in three years, while rents have gained more than 30%, according to data from property advisers JLL.

According to Shlomo Zohar, executive vice chairman of the parent group in Israel, said Ado Group and its major shareholder Shikun & Binui remain “committed as long-term strategic investors” in Ado Properties after supporting the Berlin entity over the past decade. “Markets are very supportive,” he said. “It’s a good opportunity to raise funds to support and expand the business.”

The IPO will be managed by Kempen & Co. NV and UBS Group, with Barclays and Commerzbank mandated as additional joint bookrunners, along with Arbireo Capital as process manager and sole financial adviser in the transaction. The flotation will include the sale of existing Ado Group shares and the issuing of new stock. Proceeds will be targeted at further properties in Berlin and to upgrade existing homes. Ado Properties was previously named Swallowbird Trading & Investments Ltd.

Ado Properties, which was previously known as Swallowbird Trading, said it has a conservative balance sheet consisting mainly of mortgage backed loans with an average cost of debt of 2.6%, no major maturities until 2018 and a weighted average maturity of six years.

Rabin Savion, Ado Properties CEO, said the company strategy was to create value through targeted investment in its portfolio, privatisations and accretive acquisitions. “We aim to approximately double the number of units over the next few years to generate value for our shareholders, capitalize on our existing platform and further enhance the efficiency of our operations.”

At the end of March this year Ado Properties had an overall loan-to-value ratio of 57%, which it targets reducing to below 50% after the IPO. Savion commented that “Our conservative capital structure allows for predictable growth, supporting attractive and continuous dividends whilst ensuring that our indebtedness does not restrict our business or strategy.”