Lone Star's €1.5b TLG German portfolio to list in Q4

TLG Immobilien, the Lone Star company that owns €1.5 bn of German commercial real estate, has announced plans to list on the prime standard of Frankfurt Stock Exchange in the fourth quarter of 2014.

The net proceeds generated by the IPO will be used to finance 'accretive acquisitions' in line with TLG’s strategy to expand the office and retail portfolio in its core regions as well as for value-enhancing investments into the company’s core portfolio.

VICTORIAPARTNERS is acting as independent IPO adviser and process coordinator for TLG. J.P. Morgan and UBS will act as joint global coordinators and joint bookrunners. Kempen & Co, Commerzbank and HSBC have been mandated as joint bookrunners.

TLG has been active in what it describes as the growth regions of Berlin and the eastern German cities of Dresden/Leipzig and Rostock for 20 years.

Between 30 June and 15 September 2014, TLG acquired or signed agreements to acquire two core office assets, increasing the value of its core portfolio to €1.4 bn. During the same period TLGF sold, or signed agreements to sell, 48 non-core properties with an aggregate fair value of € 70 mln. The remaining non-core assets, valued at €100 mln, are earmarked for sale in the medium term.

The core portfolio consists of 320 properties with an in-place rental yield of 7.5%. About half the core portfolio comprises office (36%), retail (50%)and hotel properties (15%), with half located in Berlin.

[b[]BACKGROUND
US private equity group Lone Star bought the TLG portfolio for €1.1 bn in December 2012 in the Germany's largest commercial real estate transaction for that year. The transaction consisted of €594 mln in equity and the remainder in debt.

At the time, the portfolio comprised around 780 assets ranging from offices and shopping centres to hotels and retirement homes. TLG was set up in 1991 to manage government-owned real estate assets in East Germany following reunification. In 2012 the agency was split into two units for commercial (TLG Immobilien) and residential real estate (TLG Wohnen) to facilitate a sale to separate buyers.