WCM relaunches with new team, partners, equity story

The listed WCM Beteligungs- und Grundbesitz AG has veritably sprung back into life after years of drifting in the doldrums and subsequent insolvency, thanks primarily to the arrival of Stavros Efremidis as CEO in late-2014. The company has now closed on three sizeable deals totalling €315m over the past month, with more apparently being finalised and in the pipeline. (See article on Greenman’s sale-and-leaseback deal with Edeka in this issue). Financing will be through bank loans and other equity measures, the company says.

Efremidis previously worked as the CEO of the listed KWG Kommunale Wohnen AG in Hamburg, a 10,000-unit residential housing company valued at €430m when it was sold to the Austrian-listed investor conwert AG. He subsequently built up conwert’s German holdings to 30,000 units. This time around he’s turning his attention to the commercial real estate market, and the company has not been slow to get off the starting blocks. Last year the company managed to buy four initial properties for about €80m shortly after Efremidis’ arrival.

In addition to the €95m joint venture deal for 29 Edeka supermarkets with Irish group Greenman, WCM also recently bought an office property in Berlin from GE Real Estate for €22m (between Hackescher Markt and Alexanderplatz), as well as signing a letter of intent on a 16-unit commercial portfolio with 88,500 sqm for €116m. Efremidis says he plans further joint venture deals with Greenman, but in any event is targeting acquisition volume in office and retail of €1bn.

The 16-unit commercial portfolio is located about half-half in the Rhine-Main region around Frankfurt and in Dresden. The net initial rental yield on the property is about 8%, with an occupancy rate of 91% and an average remaining lease term of 5 years.

The WCM strategy is to focus on core-plus and value-add segments of the market. Part of the company’s attraction for investors is sizeable tax credits based on accumulated losses in the past, which should save it sizeable German corporate and trade taxes in the near future, as well as having €1.3bn in credits against any future capital gains tax. These factors, plus a new equity story and a new management team, have often provided the ingredients for substantial share price re-ratings in the past.