Deutsche Wohnen AG posts strong H1 figures, finances BauBeCon deal

Listed Berlin-based German residential housing group Deutsche Wohnen AG more than doubled its consolidated net profit in the first half, due to rising demand in its core markets and improved asset sales. The group also finalised the financing for its recent acquisition of the 23,500-unit BauBeCon group from Barclays Bank, and announced several new planned acquisitions for the coming months.

The group’s first-half consolidated net profit rose year-on-year by €20m to €37m, while operating earnings (FFO excluding proceeds from asset sales) rose by 15% to €32.8m. The figures were boosted by rent rises of 4% to €5.75 per sqm (per month) on its existing portfolio, while reducing the vacancy rate from 1.8% to 1.5%. New lettings brought in €6.98m, while sales of apartment units amounted to €9.7m at a gross margin of 35%, with the company expecting to double that for the full year. The company also issued a positive outlook for full operations for the rest of the year, raising FFO forecast to €60-€65m from €55m, and offered shareholders the prospect of a further improved dividend following steady rises over the past two years.

CEO Michael Zahn said in a statement that in the short-term the loan-to-value on the balance sheet would rise to 57% from 39.8% following the BauBeCon acquisition, but it is targeting a reduction of this to 55% in the medium term, possible supported by the issue of a new corporate bond.  Concrete negotiations are underway, he said, for further portfolios totalling 10,000 housing units in which it will invest about €485m, with financing already lined up. The group has no major refinancing due until 2015.

Deutsche Wohnen also finalised its €1.235bn May acquisition of Barclays Bank’s BauBeCon portfolio earlier this month, putting in place the €700m of debt to accompany its own €430m equity capital in the deal. A consortium of five banks – BayernLB, pbb Deutsche Pfandbriefbank, HSH Nordbank, UniCredit Bank, and Deutsche Genossenschafts-Hypothekenbank (DG Hyp) – are providing the loan capital for the deal, which will see Deutsche Wohnen’s holdings rise from nearly 50,000 to about 72,500 residential units. Most of the BauBeCon properties are in northern German cities such as Hanover, Braunschweig, Magdeburg, and Berlin itself, one of the company’s two main strongholds along with the Rhine-Main area around Frankfurt and Wiesbaden.

Of the consortium’s partners, HSH Nordbank is financing 4,340 units valued at €134m located in cities such as Kiel, Lübeck and Bremen. BayernLB’s share is €96m underpinning 2,550 units mainly located in Berlin, while pbb Deutsche Pfandbriefbank is financing about 8,500 units (mainly in Berlin, Hanover, Braunschweig and Wittenberg).  Pbb Deutsche Pfandbriefbank said it intends to syndicate a portion of its €285m share of the financing.