Deutsche Konsum REIT-AG filling war-chest after South Africa listing

We reported last month on the move by Rolf Elgeti's Deutsche Konsum REIT-AG (DKR) to launch its secondary listing on the Johannesburg Stock Exchange, which it has since done. The company in the meantime published its full year figures at its recent AGM, and outlined its plan for the coming year.

DKR, which in Germany is listed on a number of German stock exchanges, invests in convenience retail properties in established locations, but outside of the major cities. Many of the company's assets are in the north and eastern part of Germany.

CEO Elgeti said at the AGM that the behaviour of institutional investors in respect of the grocery and convenience store sector had changed over the previous quarter. Investors were now increasingly looking to buy retail assets directly themselves, rather than via an indirect vehicle such as a third-party fund or a REIT like DKR. All in all, he said, the sector had become much more competitive, drawn in by what Elgeti says his company has been able to achieve, of initial yields of up to 10%.

In the first quarter of DKR's business year 2020/21 the company had invested €73m in new stores, and had several more acquisitions in the pipeline, said Elgeti. The company's liquidity position is strong following last year's €40m bond issue, its forthcoming €50m capital raise and a new credit line of €135m ("just in case there's any trouble on the capital markets", said Elgeti). He raised the prospects of an improved operating performance, forecasting an FFO for 2020/21 of €42m-€45m, up from last year's €34.9m.

The company is aiming to enter the SDAX for smaller companies, and initiate a share buyback programme, after what Elgeti described as a 'disappointing' share price performance, with the share price underperforming the main DAX index despite its good operating results.