Plans by Germany’s largest residential landlord Deutsche Annington for its long-awaited IPO have been noticeably gathering pace over the past few weeks. The latest word is that the group is now targeting a date possibly as early as the first week of July for first trading in its shares, and it has now mandated Morgan Stanley and JPMorgan Chase to manage its public flotation.
Given the favourable climate for anything to do with German residential at the moment, Deutsche Annington’s owners, the UK private equity group Terra Firma are understandably keen to strike while the iron is hot. German property stocks are still very much in favour with investors, who have pushed German property stocks up by more than 30% in the last twelve months.
Just a couple of months ago board member Stefan Kirsten had suggested that any IPO would be at the end of 2013 at the very earliest, so pulling the date forward so quickly is significant. However, along with other players such as Gagfah, the company has managed to completed major refinancings such as its GRAND refinancing sooner than expected (we’ve reported on this at length in earlier issues of REFIRE).
The Bochum-based Deutsche Annington owns 186,000 apartments across the nation (including a heavy weighting in North Rhine-Westphalia), and manages a further 24,000 on behalf of third parties. Most analysts would rate the quality of the Annington housing stock higher than that of Düsseldorf-based LEG with its 90,000 residential units, which recently was partially floated by owners the Whitehall Funds of Goldman Sachs, bring in €1.34m for its owners. Annington’s total valuation is put at €9.9bn in its latest balance sheet, including about €6.7bn in debt, but its relatively superior housing quality might justify a premium over LEG’s rating or some other recent capital raisings by competitors.
The most likely scenario involving an Annington public listing would be for Terra Firma to sell off a series of stakes staggered over several steps. However, a first tranche could still see it bringing in more than the €1.4bn raised by telecom operator Telefonica SA’ German unit last year – itself the largest IPO in Germany in over five years.
There is still talk of Annington pressing ahead with a CMBS issue of up to €1bn to help pay down debt to make any IPO more appetising. This could all happen very soon if the company now wants to push through its more urgent IPO timetable.
