* To buy 30,000 flats held by Vitus, 11,500 from DeWAG
* To fund deals via equity and debt
* To raise equity capital, issue hybrid bond
* 2013 operating profit rose 31.5 percent
FRANKFURT, Feb 28 Real estate group Deutsche
Annington will spend 2.4 billion euros ($3.3 billion)
on German apartments to expand its presence in the north of the
country, the company said on Friday.
The purchases follow several years of property consolidation
in Germany as investors pile into assets with relatively strong
and reliable income streams, such as property and infrastructure
projects, rather than German sovereign bonds with meagre yields.
Deutsche Annington said it had agreed in principle to take
over 30,000 residential units held by Vitus, owned by Blackstone
and private equity firm Round Hill Capital, for 1.4
It is also buying about 11,500 apartments managed by
residential real estate firm DeWAG for about 970 million euros.
The deals, to be financed with debt and equity, will give
Deutsche Annington a larger presence in the northern German
cities of Bremen and Kiel and boost both operating profits and
net asset value.
Last year, German property group Patrizia spent
2.45 billion euros on 32,000 flats owned by BayernLB.
Earlier this month, Austria's Immofinanz agreed to buy
18,000 German homes for almost 900 million euros.
"The terms of the deal seem fairly reasonable... We are
pleased that the upgrade of the existing portfolio will continue
as scheduled, and with external growth more of an 'add-on',"
Berenberg analysts said in a note.
The flats have an average vacancy rate of below 4 percent,
compared with Deutsche Annington's group average of 3.5 percent
Deutsche Annington will issue up to 16 million new shares to
raise 250 million to 300 million euros in cash, launch a
separate capital increase in exchange for assets, not cash, that
will be worth 200 million euros and issue a hybrid bond.
It is taking on around 400 million euros of debt in the
deals, Chief Executive Rolf Buch told journalists during a
conference call on Friday.
Deutsche Annington said its net ratio of financial
liabilities, or LTV-Ratio, will rise slightly to about 51
percent from 50 percent in the medium term following the
transaction, and its gross asset value will grow to about 12.8
Deutsche Annington also published 2013 results, saying its
operating profit rose 32 percent to 223.5 million euros, while
its net asset value was up almost 40 percent at 4.78 billion.