The IPO by Czech landlord Domus on Euronext Amsterdam offers institutional investors the opportunity to benefit from a rent convergence programme that outperforms those of its German listed residential property peers, according to the firm's co-CEOs.

The IPO by Czech landlord Domus on Euronext Amsterdam offers institutional investors the opportunity to benefit from a rent convergence programme that outperforms those of its German listed residential property peers, according to the firm's co-CEOs.

Domus describes itself as one of the largest private residential landlords in Central Europe. The Dutch-registered company has a net asset value of about €500 mln. It owns 44,000 residential units in the region around Ostrava, the third largest city in the Czech Republic and the second largest urban area.

In an interview with PropertyEU, Co-CEO Martin Ráž said Domus is a substantial, well-managed and well-financed company. Its growth is to a large degree embedded in contracted convergence to market rents. In contrast to Germany, where most rents only grow in line with inflation, the Czech residential rental market was liberalised in 2010, Ráž said. 'A third of our tenants are paying the market rent and two thirds are in the rent increase programme - previously regulated rents gradually growing towards market rents (currently more than 20% gap).'

'We can provide a superior product benchmarked against German residential property companies. We have demonstrated this by executing our rent convergence programme in the last three years: it is gradual and socially responsible so people are paying and delinquencies are low. But because of the gap to market rent levels we are still able to deliver a superior investment product than the German peers, just east of Germany.'

THE OFFERING
The IPO is taking place in Amsterdam as Domus is headquartered in the Dutch capital and is owned by BXR Group, the Amsterdam-based investment company in which Czech billionaire Zdenek Bakala holds a 50% non-controlling stake. Domus is seeking to raise up to €250 mln in an IPO aimed exclusively at institutional investors. It will consist of up to 2.3 million newly issued Domus shares with a target of about €38 mln in gross proceeds, and in addition, its parent company, RPG Property, will offer 9.9 million existing shares, corresponding to up to 55% of Domus' issued capital. The price range has been set at between €16.50 to €20.50 per share.

For the second part of the interview, see Domus housing portfolio focuses on industrial growth area in the Czech Republic