Domicil beefs up team as it prepares for stock market listing

The Munich-based Domicil Real Estate Group said recently it is planning a stock market IPO to boost funds for its further expansion. The company has given no specific date, other than saying it wanted to examine market feasibility “over the next few months”.

The company has brought in Matthias Moser, a hardened veteran of stock market listings from his time with the nearby Augsburg-based Patrizia Immobilien, to exclusively help lay the groundwork for the listing. Moser was previously the head of alternative investments at Patrizia, where he built up the decisive real estate private equity business. Prior to that he was the Germany boss of US private equity investor Fortress.

According to Domicil CEO Khaled Kaissar, “Over the last two years Domicil has become one of the leading German property managers focused on residential property. We have an attractive deal pipeline and have delivered very positive results for our investors. We want to drive our growth further, and along with Matthias Moser, will be looking over the coming months at a stock market listing.”

The plan, as explained by Kaissar and Moser, would seem to be to position Domicil for investors as an alternative to the listed companies on the market that maintain residential portfolios, and to ensure a relatively high free float. Given that Domicil’s business model largely involves buying and upgrading existing apartments, then selling them on within six to 24 months (much like the earlier Patrizia model). Another listed company, Berlin’s Accentro, has a similar privatization model, but has a very narrow free float, making it less liquid.

The talk is that the Domicil IPO would involve a placement of share capital of the three-digit-millions, but below €500m. The group would also use the IPO to lower its high debt leverage ratio of close to 80%, costing it high interest charges. The company has €1.5bn of assets under management, and 89 employees.

Last year Domicil was hired by Danish pension fund PFA to exclusively manage the Century residential portfolio which PFA had just bought in August for more than €1bn from Industria Wohnen. The deal was PFA’s largest-ever transaction, and came after the Danes had taken a strategic decision to “significantly increase” the fund’s exposure to real estate through 2022, a period which the fund said is likely to see interest rates remain at about the same low level as they are now.

The Century portfolio consisted of 3,700 homes across Germany, with a total of 247,300 sqm of lettable space in a commercial building and 33 separate residential building across 15 locations in Germany. Two-thirds of the 3,700 residential units are in major metropolitan centres, including Berlin, Munich, Hamburg, the Rhineland and the Rhine-Neckar region.

More than half of the Century portfolio’s rental income is generated in Berlin and Munich. The Bavarian capital, in particular, is thought to offer much upside potential with average rents in the city now nearly €10.00 per sqm, well above the Century portfolio’s current average.

Domicil also manages the targeted €200m fund for the growing residential assets of Wealthcap, part of landesbank BayernLB, who in August absorbed a starter package of eight properties across Germany worth €86m. It also has a selective acquisitions partnership with listed housing firm LEG Immobilien based in North Rhine-Westfalia.

Domicil Real Estate Group was founded in 2009 by Khaled Kaissar, still the owner and senior partner, and originally invested on its own account in German housing.

Not surprisingly, given the proximity between Munich and Augsburg, Domicil management includes several Patrizia alumni, well versed in the skills of property and asset management to handle big mandates, which big domestic and foreign investors are unable to handle on their own.

With the Danish PFA, for example, Domicil is expecting a further rollout of €300m to €500m over the next couple of years in residential investment, with the PFA portfolio being viewed as a real ‘buy-and-hold’ mandate. Domicil itself is rolling out its own development projects.