Best year for capital-raising in Germany since 2006

The year 2013 will see the most capital raised for German real estate companies from share and bond sales in any year since 2006 – a near tripling of last year’s figure – as investors took advantage of the buoyant residential sector and the return of CMBS issuance to sell stakes and refinance debt.

According to data produced in a joint report by Akselrod Consulting and Barkow Consulting, listed German companies such as Gagfah SA, LEG Immobilien AG and Deutsche Annington SE have led deals that have raised €10.7bn in the year through October – a record year since the onset of the crisis and the second-best year ever, after the boom year of 2006 when German companies raised €19.8bn on the capital markets.

Property equity issues this year have risen 90% to €2.9bn, spearheaded by the early year €1.2bn IPO of Düsseldorf housing group LEG Immobilien followed by the spring IPO of Deutsche Annington, which raised €575m. In total, the two contributed 61% to overall equity issuance, with the remaining contributions evenly split between accelerated book builds and share placements by existing shareholders, the two consultants said.

According to Peter Barkow, co-author of the report, “German real estate, especially residential, is attractive to all investor groups this year. It’s the hunt for yield with reasonable risk.”

With rising rents and purchase prices in the residential sector, it’s been a good time for long-term investors to cash out of the sector into a rising market.

In bond issuance too, the big players have ridden the wave of enthusiasm for the German market to refinance on favourable terms. Gagfah, the residential landlord still 48% owned by US private equity investor Fortress, issued the largest European CMBS this year, repaying a previous asset-backed security by raising €2.1bn in a new issue. Deutsche Annington also issued €2.5bn of euro and dollar bonds.

Although most of the capital raised was in fixed-income markets, says the report, Goldman Sachs and Annington owner Terra Firma raised a combined €1.7bn through the IPOs of their wards LEG Immobilien and Deutsche Annington respectively.