Berlin's listed ADO Properties boosts holdings by 10%

The pure-play Berlin residential investor ADO Properties is investing a fresh €218m in Berlin’s residential property sector. In its latest transaction, ADO is buying more than 1,900 residential units (including 28 commercial units) in two separate portfolio transactions structured as a share deal. The deal is expected to close by the end of August.

The assets are located in the Schöneberg, Wilmersdorf and Neukölln districts, and the portfolio, with a vacancy rate of less than 1%, should generate total annual rental income of €10.2m. The deal increases ADO's Berlin holdings by more than 10%

According to CEO Rabin Savion, the acquired portfolios fit “very well” into the firm’s strategy and “We see strong accretion potential to our existing portfolio.” The new units should add €6.9m annually to the company's FFO I figure for the full year, he said, offering guidance of FFO potential of €50m, up from last year's €30.2m.

The new units have in-place rents of between €6.20 sqm/month to €6.90 sqm/month, the company said. It expects new letting rents between €7.30 sqm/month and €9.60 sqm/month for the inner-city locations, which would be sizeable rent increases of between 17% and 38%. A portion of the newly-acquired units will be prepped for privatisation.

The SDAX-listed company raised €100m in fresh capital in April this year from its investors and its Israeli-listed parent ADO Group for new acquisitions. It recently refinanced a €150m loan over 6.5 years with local bank Berlin Hyp for a residential portfolio with 77 properties, containing 3,261 units and a total lettable area of 175,000 sqm.

The company's plan is to double the size of its portfolio by 2020. In July 2015 the company went public, raising proceeds of around €200 mln. Parent group ADO retained a 40% stakeholding after the listing.