2015 to see further strong year in resi portfolio sales

Some 304,000 German apartments were traded in portfolio transactions of over 800 units last year, the same strong level as in 2013, says the BBSR specialist federal institute. It expects another strong year for 2015.

In a new report, BBSR (Bundesinstitut für Bau-, Stadt- und Raumforschung) said German residential market activity should continue strong, driven by M&A activity in first half. The largest deal was Deutsche Annington taking over Berlin peer Gagfah for €3.9bn, creating the largest European listed housing firm, with 350,000 residential units.

Adler Real Estate, managing 31,000 flats, has also issued a takeover bid for 20,000-unit Westgrund, valuing the latter at €350m. It noted that a significant overlap in the shareholder structure is facilitating the transactions.

In last year’s first half, their German housing market activity was characterised by financial investors exiting holdings via the stock exchange; US Fortress Investment sold 28% of Gagfah, while UK private equity group Terra Firma shed 13% of Deutsche Annington. The largest deal in the second half was Westgrund buying 13,300-unit berlinovo for €390m from the Berlin city-state.

Overall, BBSR registered 48 large portfolio sales last year in total, down from 51 in 2013. Private companies were responsible for 87% of sales and 96% of acquisitions. Communal housing firms remain net sellers, though some are now back on an expansion course, especially in Berlin.