Deutsche Annington gave a strong push in February to consolidation in the German residential property sector by snapping up a further 41,000 units.

Deutsche Annington gave a strong push in February to consolidation in the German residential property sector by snapping up a further 41,000 units.

Although it took two attempts to get its IPO over the line in 2013, Deutsche Annington is now the largest residential property landlord in Germany. It owns 175,000 residential units, manages 36,000 apartments for other owners and is on a steep growth curve.

The company paid some €2.4 bn in February to acquire 41,000 units in two transactions. The deals saw Deutsche Annington, which is based in Bochum, western Germany, increase its presence in the north of the country, with 9,500 of the units in Bremen and 9,250 in Kiel. The portfolio has an average vacancy rate of below 4% and covers an area of more than 2.6 million m2.

In the largest of the two deals, Deutsche Annington acquired 30,000 apartments from Vitus Group. The properties cost around €1.5 bn, including repayment of third-party debt, with the deal due to complete in the fourth quarter of 2014. Vitus Group is currently owned by a group of funds managed by Round Hill Capital, Blackstone, Deutsche Bank and Aviva.

Deutsche Annington said it will finance the transactions with the assumption of existing liabilities and a combination of equity and debt instruments.

Meanwhile, Austrian-based CEE investor Immofinanz has positioned its Buwog residential unit for a spin-off by adding the 18,000-unit DGAG residential portfolio in northern Germany to its holdings.

The vendor was Solaia Real Estate, a joint venture between Italian listed group Prelios and an investment fund managed by Deutsche Asset & Wealth Management. The package of 18,000 apartments, which provide a total of 1.09 million m2 of lettable space in Northern Germany with a vacancy rate of 2.3%, is being acquired for €917 mln, reflecting a value per m2 of €819 and a gross yield of 7.6%. The transaction, which will be executed through several share deals, is expected to close in the second quarter of 2014. The purchase price consists of €162 mln of equity and €736 mln of debt.

SPIN OFF
As part of the deal, Buwog will also take over the residential asset and property management business of Prelios Deutschland with roughly 300 employees. In addition, all existing property management mandates representing a total of 33,000 third party-owned residential units will be transferred to Buwog.

The transaction will increase Buwog's portfolio to a total of 54,000 units with 3.72 million m2 of usable space and a gross asset value of €3.5 bn. The gross rental yield of the total portfolio will equal 5.5% based on a vacancy rate of 4.5%.

Buwog's repositioning involves focusing the portfolio on Berlin and Austria, and shedding lower-yielding holdings elsewhere in Austria to make the company more attractive to shareholders. A previous big step in the realignment came in August 2013 when Buwog sold 48 properties with 1,135 flats and lettable space totalling nearly 84,000 m2, largely located in Linz, Wels, and Steyr.

TAKEOVERS
Adler Real Estate, with roots dating back to the 1900s, is a listed mid-sized residential property company looking to expand significantly. After a string of transactions in 2013 the Frankfurt-based company increased its assets under management from €44 mln at end-2012 to €358 mln at the end of the third quarter of 2013.

Adler struck again in February this year with the acquisition of 2,400 units in Northern Germany from Swiss turnaround specialist Corestate. The price was not disclosed. Around the same time Adler announced plans to launch a takeover offer for peer Estavis.

Estavis is the owner of around 2,100 apartments largely located in the German cities of Berlin, Leipzig and Chemnitz. It also holds a stake in an operating company specialising in the privatisation of apartments.

The largest takeover in the German listed residential property sector occurred in the latter part of 2013 when Deutsche Wohnen took control of Berlin landlord GSW in a €2.3 bn deal. This created a group with 147,000 units, making it second in size to Deutsche Annington.