Deutsche Wohnen tees up fresh funding for further buys
Listed Berlin-based residential property investor Deutsche Wohnen AG has called an extraordinary general meeting for December 4th to request shareholder approval for a further rights issue, which would nearly double the company’s share capital and bring in up to €1bn of fresh buying power.
Deutsche Wohnen has effectively used up the €620m in extra capital raised in two rights issues, in November 2011 and June this year, and plans a number of major new portfolio acquisitions. Earlier this summer, the company bought the old labour union-owned BauBeCon portfolio of 24,000 residential units from Barclays Bank for €1.3bn, after original owners RREEF and Prelios (the old Pirelli Real Estate) defaulted on their covenants and succumbed to foreclosure.
The latest capital-raising move had been flagged at the annual general meeting in June this year, with the company giving clear indications of its expansion ambitions. Deutsche Wohnen CEO Michael Zahn has indicated that his company is now targeting the 38,000-unit Woba portfolio of Dresden housing units which fellow-listed Gagfah AG is seeking to dispose of by year-end. The Woba portfolio generates net annual rental income of €133m.
Gagfah has the Woba portfolio valued on its books at €1.8bn, which Deutsche Wohnen could swallow on the basis of a successful rights issue and bank borrowings. In a statement, the company merely said “Large volume portfolios and a number of smaller portfolios are currently on the market or will be in the near future. These present excellent acquisition opportunities for Deutsche Wohnen to expand and enhance the value of its portfolio.”
Deutsche Wohnen has been buying up portfolios consistently over the last twelve months, bringing its total holdings to a current 70,000 residential units. The proceeds of the recent rights issues have been almost completely used up in buying the BauBeCon portfolio, nearly 1,200 units in Düsseldorf, 1,500 units in Berlin, and its latest bolt-on acquisition of nearly 5,100 units in and around the city of Braunschweig. The latter acquisition gives the company a third core region with a critical mass of properties under management, namely Hanover/Braunschweig/Magdeburg, in addition to its existing core regions of Greater Berlin and the Rhine-Main region around Frankfurt and Wiesbaden.
CEO Zahn has ruled out his company bidding on the 11,500-unit residential division of Berlin-based TLG Immobilien AG, valued at €500m and which is due to be privatised by the Berlin government in an auction process due to be concluded by the end of November this year.