Listed Berlin specialist Ado Properties poised for further growth
Listed Berlin residential property specialist Ado Properties has bought the "Nordic Tower" in Berlin-Hohenschönhausen. The high-rise property, which was refurbished in 2012, contains 136 residential units and six commercial units with a total floor area of 8,330 sqm und is completely leased. The seller is the Norwegian AKG Invest AS, with Ziegert Bank- und Immobilienconsulting brokering the deal.
REFIRE visited Ado Properties in Berlin recently to get an update since the company presented its nine-months figures for 2015. It now owns and manages more than 16,000 residential units exclusively in Berlin, mainly in central districts. Four months after its stock exchange listing last year, the 10-year-old company managed to double its FFO to €22m after a spate of acquisitions, with CEO Rabin Savion confirming FFO guidance for the full year of €30m.
At the end of September, ADO Properties owned 14,600 apartments in the capital valued at €1.2bn, up from 6,600 at the end of 2014. (Property advisor CBRE has since revalued the portfolio upwards, to €1.3bn, before subsequent acquisitions). The company's LTV ratio is 41.8%, and its net asset value is €20.54, while the share price is trading at about €26.50 (The company listed at €20.00 in July, generating€200m for the company). The Tel Aviv-listed Ado Group remains a 36% shareholder in the German group.
REFIRE: The company is well positioned, in our view, as a pure play on Berlin residential. Given the political efforts in the capital to dampen down rent rise expectations by a variety of measures designed to promote affordability, this is not a given. Nonetheless, we were impressed by the company's commitment to micro-managing its assets and integrating IT and customer service systems designed to know everything about both market rents and maximum permissible rents across its holdings.
This level of sophistication is among the highest we have seen among housing management companies, and helps explain why Ado managed to increase its average in-place rent per month to €5.75/sqm, reflecting an average annual rental growth of 6.5% on a like-for-like basis. The vacancy rate dropped 3%, like-for-like, and currently stands at 4%. The customer-centric approach certainly helps here too, as does a company culture more akin to a software growth company than a classic residential property and facility manager. The market seems to like the company as well, offering strong support for the shares since last year's IPO.