TLG inks €100m of German deals as part of growth strategy

Frankfurt-listed investor TLG Immobilien has agreed the €86 mln acquisition of two retail centres in the Berlin area from private owners as part of plans to grow its portfolio to over €2 bn in the next three years.

The assets are the 27,100 m2 Bahnhofs-Passage in Bernau near Berlin and the 26,000 m2 Handelscentrum Strausberg shopping centre.

Bahnhofs-Passage generates €4 mln in net rents annually and has a weighted average lease term of four years.

Earlier this week, TLG also announced the acquisition of an office building in the city of Rostock from DG Anlage. The investment volume of €15 mln reflects a yield of almost 8.4%.The centrally located property was built in 1995 and features 16,000 m2 of lettable space, primarily for office use.

Growth plans
TLG, a listed commercial property investor 40% owned by US private equity firm Lone Star, plans to grow its portfolio to around €2 bn in the next three years, management board member Peter Finkbeiner told PropertyEU last month.

‘Following the acquisition by Lone Star, we cleaned up the company’s portfolio and adjusted our corporate structure. We then began to grow and last year started buying assets again. We are looking to buy for €500 mln in the next three years,' Finkbeiner said.

The company focuses on assets which are FFO accretive, he added. 'For offices we are actively looking in Berlin, Dresden, Leipzig and Rostock and for the retail assets we will invest in highly frequented micro locations across eastern Germany, which offers higher yields compared to the western part.'

IPO
Commenting on financing for the acquisitions, Finkbeiner said the company still has ‘some cash’ available from the IPO and will then introduce new debt into its investment portfolio with a targeted long-term net LTV-ratio of between 45 and 50%.

TLG Immobilien went public in October last year, raising €360 mln in the offering. In total, it placed 33.5 million shares with institutional investors at a price of €10.75 per share, representing the bottom end of the expected price range. US private equity group Lone Star retained a 40% stake in the company, which it acquired from the German state in 2012.

Finkbeiner said the listing took place under 'tricky market conditions'. ‘We started the process in early 2014 and when we got there markets had changed but we were faced with the option of either postponing the IPO or going through with it at a lower price,’ he commented.

By placing the shares at a lower price, the company has the advantage of delivering good performance to its investors. TLG Immoblilien’s shares are currently trading at €15 a share, up nearly 50% on the listing price of €10.75 six months ago.