REAL ESTATE – US private equity firm Fortress will on Thursday float part of its German property portfolio, consolidated under the firm Gagfah, on Frankfurt’s stock exchange.
Fortress said that on Thursday, it would offer 45 million shares in Gagfah to investors. This includes a greenshoe and represents a 25% stake in Gagfah.
Given a bookbuilding range of between 17 and 19 euros per Gagfah share, Fortress aims to take in between €765m and €855m from the IPO. Last summer, the German press had reported that Fortress’ initial IPO could be worth between €1bn and €1.5bn.
At any rate, Fortress said that there was "strong investor interest" in the IPO, which is why it was selling the shares on Thursday instead of next Monday.
Since entering the market in 2004, Fortress has acquired three residential property firms in Germany, including Gagfah, Nileg and Woba. These firms own 160,000 flats between them.
For tax reasons, Fortress has bundled the three firms together in a Luxembourg-based holding that is Gagfah.
Fortress’ partial floatation of Gagfah comes more than two months before January 1, or when the government plans to legalise German real estate investment trusts (REITs). Once it is listed, Gagfah will in theory be eligible to become a German REIT and profit from the vehicle’s tax-privileged status.
Meanwhile, the federal cabinet is to approve legislation legalising German REITs next week. Under the law, firms qualifying for REIT status must have a 15% free-float, have 75% of assets invested in real estate and have 75% of its income generated from the renting, leasing and sale of property.
Earlier, fund industry association BVI has elected Bärbel Schomberg, chief executive of DEGI, as its chief spokeswoman for German real estate funds, including those for retail and institutional clients.