Deutsche Wohnen wraps up financing on earlier Blackstone deal

The MDAX-listed residential investor Deutsche Wohnen AG wrapped up a number of financing packages this month in relation to earlier acquisitions, while showing that it has little trouble garnering new financing options from traditional lenders.

Deutsche Wohnen paid €369m in April this year for a portfolio comprising 6,900 units from Blackstone’s Reakl Estate Partners Europe III Fund. Different parts of that portfolio have now been financed by different banks, including Sweden SEB AG, HSH Nordbank and pbb Deutsche Pfandbriefbank.

SEB is putting in €75m underpinned by 2,100 residential units, while HSH Nordbank is lending €34.4m for the purchase of 1,063 residential and commercial units in two part-portfolios in central Berlin. Pbb Deutsche Pfandbrief’s €63m allocation is for a part-portfolio of 2,240 units mainly in Berlin, but with some assets in Potsdam and Eberswalde. The Munich-based bank has said in several recent statements that it is keen to boost its business in Berlin.

Deutsche Wohnen itself topped up its holdings again during the month by buying a geographically-mixed bag from private equity investor Cerberus’s Speymill portfolio.  Half of the units are located in and around Berlin, with others in cities such as Koblenz and Hanover. Cerberus paid about €900m last year for a package of 22,000 apartments last year from the insolvent AIM-listed Speymill Deutsche Immobilien.

Figures just in from brokers BNP Paribas Real Estate show that about €6bn was invested in the first half of this year in large-size residential portfolios. A total of 11 deals topped the €100m mark, or about 70% of all relevant transactions. Although down 12% on last year’s comparable figures, it’s the second-highest volume for a six-month period in the last six years, boosted by a very strong second quarter.

Among the investors, listed property companies and pension funds were to the fore, each making up 22% of deals by volume. Spezialfonds came next at 14%, with equity/real estate funds making up 12.5%, and then insurance companies (11.5%) and non-listed property companies at 8%, with assorted others making up the rest. Georgraphically, German investors were responsible for 84%, followed by other European investors way back at 12%, and US investors down at 3%.

REFIRE: About 100 transactions numbering more than 95,000 residential units were relevant for the BNPPRE analysis, among them the €2bn sale of 29,000 GBW-owned apartments to Patrizia Immobilien, and the 6,900-unit sale by Blackstone to Deutsche Wohnen, mentioned above. In contrast to earlier phases, this recent period has been marked by the sale of portfolios with a wide geographic dispersal, making up 84% of all deals.

This may have two reasons. Either acquiring companies are becoming more confident of handling wider geographical spreads through their more sophisticated property management and IT systems, or they are acquiring portfolios which include gooseberries among the rich red cherries that make sense for their critical mass, and which will be filtered out later. The latter reason is more likely. For the moment, there’s no immediate pressure to start brutally pruning. With most of the broker groups targeting a full-year investment figure in the portfolio sector of just over €10bn, the market still seems to have plenty of legs.