FdR lifts stake in German resi arm in €1b deal

French REIT Foncière des Régions is to double its shareholding in German residential arm Foncière Développement Logements in a deal valued at €1 bn.

FdR's board approved plans this week to carry out a share swap which will increase its stake in the housing unit to between 58.2% and 62.4% of FDL, from 31.6% at present.

The operation, planned for completion in September, will be implemented on the basis of six new FdR shares for 23 FDL shares, representing a discount of some 11% on the price of FDL shares.

The acquisition is valued at nearly €1 bn, Metz-based FdR said.

'Foncière des Régions is increasing its presence in Germany, which has a solid economy and an attractive real estate market, and where we have been implementing an active property management strategy since 2005,' commented chief executive Christophe Kullmann.

FdR has been the majority shareholder of FDL since establishing the subsidiary in 2005. The housing unit currently owns a portfolio valued at €3.2 bn, three quarters of which is located in Germany, with the rest in France.

In a statement, Metz-based FdR said current FDL shareholders ACM and Covéa have committed to contributing their 26.6% stake to the offer, while Cardif, Crédit Agricole Assurances and Generali have opted to remain FDL shareholders.

'This offer for shares will strengthen FdR’s position in growth markets, increasing its exposure in Germany to 15%, compared to 10% at present,' FdR said. With this transaction, FdR hopes to 'garner the benefits of a particularly sound economy featuring low unemployment rates and the highest growth forecasts in the Eurozone,' it added.

On completion of the deal, FDL will be fully consolidated within FdR. The company will continue to pursue its strategy of geographic diversification through disposals of mature assets and acquisitions in high-potential cities like Berlin.