Deutsche Wohnen adds to war-chest for further acquisitions

One company which has been riding high in investors’ affections has been Deutsche Wohnen AG, the Berlin-based residential housing manager, who has now managed three successful cash calls on investors over the last fifteen months.

The latest capital increase took place in an overnight action earlier this month and raised €195m from domestic and foreign instituionals, in an issue that was several times oversubscribed. The 14.6m new ordinary bearer shares were placed by way of an accelerated book-building process at a price of €13.35 each, with the proceeds increasing its share capital by 10% to €161m. The new shares carry full dividend rights as of 1 January 2012, so investors can expect a full payout based on last year’s yet-to-be-announced results.

Deutsche Wohnen says it has earmarked the fresh funds to finance recent acquisitions in Berlin, including a 5,200-unit apartment portfolio valued at around €240m, along with four managed care facilities – and further buys it has identified in its pipeline for later this year. Typical financing by Deutsche Wohnen on such projects is 60% (with HSH Nordbank being the lending bank on the latest deal).

(There has been speculation that Deutsche Wohnen was eyeing up the 38,000-unit Woba Dresden portfolio from residential rival GAGFAH, although with new financing in place GAGFAH may be considering taking the portfolio back off the market, REFIRE understands.)

The capital increase is Deutsche Wohnen’s third in 15 months, bringing total new equity funding to some €820m since November 2011, and gathering up new capital for expansion. The group now has 73,500 residential units under management and wants to expand further, particularly in its key markets of Berlin, Lower Saxony and the Rhine-Main region.

CEO Michael Zahn took the opportunity to issue a positive forecast for the coming year. “Following our accretive transactions in 2012 we are going to use the new equity as basis to drive additional value creation whilst we maintain our conservative financial leverage,” he said. “Given the most recent acquisitions, we expect a recurring funds from operations FFO of approximately €100m, after taxes, for the current financial year 2013.” (after 2012 FFO of €65m, not counting asset disposals).