LEG raises more than €1.3b in German IPO

Düsseldorf-based property group LEG Immobilien raised more than €1.3bn on Friday in the second largest German IPO in five years, with shares priced in the middle of the expected range at €44.

The deal, which marks the largest European property IPO since Russia's $1.85 bn PIK Group floatation in 2007, was around four times oversubscribed.

According to an LEG spokesman, around 70% of interest came from UK and US investors. 'We are happy with this result,' he told PropertyEU.

The IPO is expected to have a positive knock-on effect on the market, following an uncharacteristically quiet year in 2012, which marked the second-worst year for IPOs since the onset of the financial crisis.

LEG Immobilien has been sold by Goldman's Whitehall property funds and New York-based hedge fund Perry Corp. who each held 89% and 11%, respectively, against a backdrop of strong investor interest in Germany’s housing sector, which is viewed as a stable asset class providing good cash flow.

LEG owns 91,000 homes in North-Rhine Westphalia. And the property group plans to grow this figure by acquiring an additional 10,000 apartments in North-Rhine Westphalia over the next two years, the spokesman told PropertyEU. It has already earmarked €170 mln for the investment.

Germany's residential sector is going from strength to strength, with portfolio transactions up around 70% to €11.1 bn in 2012, according to JLL, due to strong demand on the part of investors to tap into what is widely-viewed as Europe's most stable economy.

Goldman Sachs announced last December that it would sell off some of its German property assets, including the sale of 17 German department stores, including Berlin's prestigious KaDeWe store, to Austrian investor Benko for €1.1 bn.