Godewind IPO bows to reality of current market climate

A new listed German commercial real estate company will soon be gracing the ranks of Frankfurt's stock market-quoted sector with the launch of Godewind Real Estate.

Godewind is starting as a so-called Blind Pool, in which capital is being raised for acquisitions of real estate, of which there are currently none. This gives it more the form and shape of a Luxembourg-registered fund, but the directors say that this hitherto unique form of listing in Germany will soon see the company fill up its books with commercial property assets.

The company had planned to raise gross proceeds of at least €450m to buy office assets (60%), as well as some logistics and retail properties (20%), by raising the base capital from 15m shares by selling up to 112,500,000 newly-issued shares from a capital increase for €4.00 per share. In a more optimistic scenario, it thought it could add a further 25m new shares to raise proceeds to €550m.

However, the current climate on the stock market has given cause for more modest expectations, and Godewind settled for placing €94m shares at €4.00 this week, bringing in a total of €375m, well down on earlier more optimistic expectations.

Behind the new launch are Stavros Efremidis and Ralf Struckmeyer, two well-known ex-CEOs from formerly listed WCM Beteiligungs GmbH, with Godewind itself having been an associated company of WCM operating under the name KPE Holding. Efremidis and Struckmeyer, along with members of the supervisory board, are contributing €60m to the launch issue (after originally committing to contribute €50m).

WCM attracted investors with tax-loss carryovers before the company got taken over by listed TLG Immobilien, and likewise Godewind can benefit from considerable write-downable tax losses for the first few years as it builds up its portfolio. These include €180m of corporate income tax and €175m of trade tax, along with €133m of withholding tax credits for the first few years for shareholders.

The company said it wants to grow its portfolio to about €3bn in the medium term, and said it had already identified opportunities worth €3.7bn, with a balanced split across office portfolios and logistics and retail. It said it will finance this with a targeted LTV of between 45% and 55%, and is targeting a dividend payout ratio of at least 60% of FFO1.