Berlin-based Velero Immobilien AG, a property management service provider in the German residential real estate market, said this week that it was cancelling its proposed stock market listing scheduled for 27th October given the uncertainty on the stock market.
The company’s planned private placement of new shares in the course of the IPO has likewise been postponed until market prospects improve, the company said. The plan was to conduct a private placement exclusively for institutional investors by issuing new shares from a capital increase prior to the listing.
The company said it would use the net proceeds from its offering to transform into an independent real estate platform through the acquisition of three property portfolios it has earmarked, and by completing on its accretive acquisition pipeline.
The three portfolios comprise a total of 10,189 residential units mainly located in mid-sized cities in North-Rhine Westphalia and eastern Germany which have been managed by Velero and its affiliates since 2016. The portfolio carries substantial upside potential, said the company, which Velero plans to unlock with “hands-on asset management and the envisaged execution of an extensive investment plan”.
Sascha Giest, Co-CEO and chief financial officer of Velero remained optimistic about the state of the housing market. “We believe that German residential real estate markets in mid-sized cities will show further dynamic growth in the future. Particularly, during the months of the Covid-19-crisis, these markets proved to be relatively resilient“, he said.
'Moreover, our properties provide affordable and quality living space to households in the low-to-mid income range. In our opinion, this part of the market is particularly resistant to adverse effects from a possible economic downturn, especially when compared to the higher end of the market. In addition, the size range of our apartments suits the trend towards smaller households well.'
Another company shelving its plans for a stock market flotation is Omonia Office, which had planned to raise €400m from its listing to invest in German office space. As demand for space wanes, investors are clearly backing away given the uncertain outlook for the sector.
Fellow German listed property companies focused on the office sector have seen their share prices falling steadily over the year as the COVID-19 crisis continue with vehemence. Among those whose share price has fallen by at least a third to a half include Hamburg-based REIT Alstria Office AG, Aroundtown SA, TLG Immobilien, and DIC Asset AG.
