While a majority of Berliners were voting to resocialise up to 240,000 apartments in their city, about 14,000 privately-owned apartments were changing hands, from one Swedish landlord to another.
The Malmö-headquartered Heimstaden Bostad, is paying the firm Akelius €9.1bn (SEK 92.5bn) for its entire German and Scandinavian portfolio of 28,776 homes.
The deal, which includes the full due Grunderwerbsteuer or land transfer tax, is expected to close in December, subject to cartel authority approvals. Akelius had announced in June that it was considering selling its mature properties in Germany and Scandinavia.
The portfolio, which consists of 599 buildings, is located across Germany, Sweden, and Denmark. The assets, which produce an annual rent of SEK 2.8 billion, are located in Berlin (14,050 homes), Hamburg (3,592), Stockholm (5,934), Malmö (4,107), and Copenhagen (1,093). The deal will make Heimstaden one of the largest private landlords in Berlin.
The move sees parent company Akelius Residential Property selling its entire holdings in Germany, Sweden and Denmark, consisting of about 100 different real estate companies with about 500 sites and separate assets. The deal with Heimstaden sees the transfer of all the associated operating companies along with staff, while Akelius will in future concentrate on Canada, the USA, the UK and France.
Heimstaden said it would pay for Akelius' portfolio with a mix of cash at hand, new equity and a SEK65.7 billion bridge financing facility with a 2-year maturity, "maintaining leverage in line with policy". Equity has been committed by existing shareholders Heimstaden AB (SEK 8.5 billion); KPA Pension, which is part of Folksam Group (SEK 8 billion); Alecta (SEK 7.1 billion); and the Swedish Pensions Agency (SEK 1.25 billion).
Deutsche Bank served as financial adviser to Heimstaden, and is underwriting the bridge financing facility with JP Morgan.
Heimstaden itself has been active in Germany since 2018 with 5,000 apartments, and is already a landlord of 7,300 units across Berlin, Halle (Saale), Magdeburg and Rostock. The deal adds Hamburg to the cities it's now active in in Germany, and triples the company's German holdings to about 25,000 units. Caroline Oelmann, managing director of Heimstaden Germany, said "We are very aware of the high responsibility that this growth step involves."
Heimstaden's CEO Patrik Hall said that scale leads to improvements throughout the company’s value chain.
“Over the last few years, Heimstaden Bostad has successfully integrated properties and organisations in new and existing markets, with large acquisitions in Denmark, the Netherlands, the Czech Republic, and Germany,” Hall said.
Christian Fladeland, co-chief investment officer at Heimstaden added: “We are growing our presence in markets where we have strong knowledge and experience and markets that share key attributes, such as supply/demand imbalance, favourable demographic trends, and growing economies. We are particularly pleased to grow and expand geographically in Germany, the largest and most mature residential market in Europe, and to establish a presence in Hamburg.”
Heimstaden already owns about 116,000 apartments in ten European countries, valued at €18.2bn.
REFIRE: Akelius's founder Roger Akelius gave an interview to Swedish magazine Hem & Hyra last month, in which he revealed he wanted to sell its apartment holdings in Sweden, Denmark and Germany, effectively leaving its home market of Sweden after 27 years. He described any deal as "not close", so clearly things have moved quickly since then.
Part of his shift to the UK, Canada and the US, he says, is because it's more profitable, with the EU introducing ever more regulation over the last 20 years. "England, Canada and the US simplify things for companies. This means that GDP growth is and will be a few percent higher in these countries than in the EU," he said.
"Of course, thanks to rent regulation it is easier to own rental houses in Sweden than in countries with market rents; never any vacancies... Of course, I don't want to leave Sweden. But thanks to the Swedish housing shortage, I get a good price for our Swedish rental houses.
"I am 76 years old and would like to see us invest more in various charitable programmes. Everything will eventually go to charity, primarily education. Then Akelius will pay off loans and invest more in Canada and England."
Akelius in Germany has often been the object of protest from tenants' associations for pressing the absolute maximum out of legally permitted lease agreements with tenants. The company has on a number of occasions in Hamburg and Berlin been outmanouvered by local authorities exercising their Vorkaufsrecht, or right of first option, to prevent a property being bought by e.g. Akelius. In a number of instances, the company was accused of sharp practice in its exploitation of the Share Deal loophole, which enabled companies to avoid paying the Grunderwerbsteuer, or land transfer tax. These laws were tightened up earlier this year, making it more difficult to fully avoid the tax.
We reported earlier this year that Akelius was now considering expanding into the surrounding areas of Berlin and Hamburg due to rising prices and increased regulation in the inner-city areas. Berlin, which at more than €3bn made up nearly a quarter of Akelius's entire holdings, was increasingly the subject of tenant protests and local government interference.
Akelius Deutschland's managing director Jordan Milewicz said at the time the company planned to remain in Germany. However, "we want to expand the radius of our investments by an hour's drive around our main locations in Berlin and Hamburg, because the metropolitan areas are growing and the urbanisation of the attractive metropolises will continue to increase", he said.
Last year the total growth in Akelius's property portfolio was 0.3%. The ill-fated Mietendeckel itself may have cost Akelius €23m, according to the company's annual report.
Enough, obviously, to have had the company review its plans entirely and decide to leave the whole headache to somebody else.
