Terra Firma exit sees Abu Dhabi fund take 13.4% in Annington

In a flurry of activity over a hectic couple of days, the ownership structure of Germany’s largest private landlord Deutsche Annington underwent a major transformation. The share sales roundabout has resulted in, among other investors, the Middle East sovereign wealth fund Abu Dhabi Investment Authority taking a direct stake of 13.4% of the voting rights in Annington

The company’s long-time owner, UK private equity group Terra Firma, in which the Abu Dhabi Investment Authority is also an investor, withdrew from its 67.3% ownership stake in Deutsche Annington (following last year’s scrambled IPO) by placing most of its stake with its own fund investors, including JP Morgan Private Equity and Bank of America Merrill Lynch.

Terra Firma, through its funds Monterey Holdings I and CPI Capital Partners Europe GP, also placed a further 12.5% or 30m shares at €19.50 for a net €585m at the Frankfurt stock exchange, in which JP Morgan Private Equity also participated alongside other investors. After falling back initially, the share price has since bounced back to about €21.70.

The listed Bochum-based Annington was effectively built by Terra Firma, starting with 64,000 railway workers’ apartments in 2001. It now has nearly 215,000 of its own apartments (after its recent acquisition of a further nearly 40,000 units for €2.4bn) and managers nearly 27,000 others for third parties.

Annington has embarked on a major €150m modernisation programme of its housing assets, initially concentrating on energy-efficient refurbishment of more than 2,500 apartments. It is also budgeting a further €160m for maintenance this year. Last year the company invested €20.00 per sqm in refurbishment and modernisation, rising to €29.00 this year, which it says is the highest in the industry. In any event, new CEO Buch has presided over a refinancing of €4bn since arriving in July last year, the recent two acquisitions of nearly 40,000 units, and the beefing up of local maintenance teams to 1,500 ‘hausmeister’ and repairmen in a bid to improve tenant satisfaction.

REFIRE attended a briefing last week given by Rolf Buch, the chairman of Germany’s largest private landlord Deutsche Annington AG, in which he outlined his plans for the medium-term growth of the company. Buch, who took over as the top man at Annington last year, brings broad and varied experience from other industries, including from his last position as board member at media conglomerate Bertelsmann. He seemed relieved at the new perspectives afforded by the departure of Annington’s long time shareholder and patron Terra Firma, and the transformation in the free float from 26% to 90%. In response to questions, he was particularly clear in his views as to what we should expect from the Mietpreisbremse, and what he sees as its likely weak points. (See later article in this issue for more on Buch’s views on the subject.)