Fair Value REIT targets new growth with cash capital increase
The Munich-headquartered Fair Value REIT AG, the smallest of Germany’s handful of legitimate REITs with a current market cap of just over €76m, is in the middle of a cash capital increase along with a new scrip offer of 4.7m new shares, with shares being issued in the ratio of 2:1 at a price of €7.90. The shares will enjoy full dividend rights backdated to January 1st 2015.
The move will see the company raise about €37m in new capital, with about 90% of the proceeds targeted at buying real estate directly from Fair Value subsidiaries and from third parties. The remainder will go to buying further stakes in subsidiaries from minority shareholders, mainly closed-end funds.
Currently Fair Value REIT holds 43 assets valued at €281m, with a median occupancy rate of 91.5%. Its rental income is derived 52% from retail and 37% from office properties, at the latest count.
The company said that its major shareholder (25.08%) Obotritia Capital KG, the Potsdam-based private investment vehicle of ex-TAG Immobilien CEO Rolf Elgeti, would be participating fully in the capital increase if required, but would waive its rights in the interests of new investors if demand proved overwhelming by the deadline of May 5th. Fair Value recently said it particularly wanted to broaden the base of the company’s free float. The share price has risen strongly since Elgeti’s arrival on the share register last year, after years of moving sideways around the €4.00 mark.
Frank Schaich, the company’s CEO, commented: “The implementation of the capital increase is designed to be an important step in accelerating the implementation of our growth targets. We are focusing on retail and office real estate in secondary locations in Germany which, in comparison with the top seven cities, generate sustainable excess returns.
“In addition to direct investments, we are using our long-standing experience in managing real estate participations to give us special market access to closed-end real estate funds. This market segment harbours interesting entry opportunities at attractive prices.”