LEG Immobilien, Germany's third largest listed residential owner, is acquiring 13,800 units from Vonovia, the largest player in the sector which recently stymied a planned merger between LEG and the number two in German residential.
LEG Immobilien, Germany's third largest listed residential owner, is acquiring 13,800 units from Vonovia, the largest player in the sector which recently stymied a planned merger between LEG and the number two in German residential.
The portfolio centred on North Rhine-Westphalia is changing hands for €600 mln, reflecting a rental yield of 7.8%.
LEG owns 110,000 rental properties. The company said last month that it would be seeking to expand its regionally focused portfolio in and around North Rhine-Westphalia after a proposed friendly merger with Deutsche Wohnen, the number two in the sector, collapsed. The merger plan lost shareholder support after Vonovia unveiled a €14 bn share and cash offer for Deutsche Wohnen. Vonovia is pressing ahead with the hostile bid.
'The agreed acquisition of the portfolio from Vonovia has again enabled us to demonstrate LEG’s attractive growth opportunities in our dynamic core market,' commented Thomas Hegel, CEO of LEG Immobilien. 'We are creating sustainable value for our shareholders. In view of the ongoing substantial potential in North Rhine-Westphalia, we intend to continue the consistent approach of our successful strategy.'
LEG said the acquired portfolio leads to a 'significant improvement in earnings power on account of the comprehensive synergies with the existing residential portfolio'. The portfolio generates annual rents of €48 mln, with a vacancy level of 6.3%. The rent per m2 amounts to €4.84.
The deal will contribute €28 mln in annualised FFO based on the assumption that the acquisition is financed with a loan-to-value ratio of around 50%. LEG said for the future it is considering 'an equity measure' to finance the equity portion of the deal.
Closing of the deal is expected for spring 2016.
