Westgrund raises €140m in share issue to fund acquisitions

Listed German residential landlord Westgrund has raised €140 mln from a share issue in the first phase of its drive to raise funds to support its aggressive growth strategy.

The gross proceeds of the capital increase will primarily be used to finance the €390 mln acquisition in July of a residential property portfolio from the Berlinovo real estate company.

The Berlinovo portfolio comprises around 13,300 flats in Lower Saxony, Brandenburg, Mecklenburg-Western Pomerania, and Saxony. The transaction expands Westgrund's portfolio from around 7,000 to around 20,000 units. It will also increase the annualised net rental income by more than 150% to a total exceeding €61 mln.

Westgrund said on 11 September that €80 mln, corresponding to around 23 million new shares, has already been placed, with existing shareholders assigned their pre-emptive rights over a corresponding number of shares. The new shares were subscribed at a price of €3.50 per share by way of pre-placement.

Existing shareholder Wecken & Cie has committed to subscribe to another 10 million shares, lifting the gross proceeds to €140 mln. The order book was oversubscribed within hours.

The remaining new shares will be offered to existing shareholders for subscription until 24 September 2014. The capital measure was facilitated by Berenberg Bank and Baader Bank as joint global coordinator and joint bookrunner who agreed to underwrite the transaction.

Heuking Kühn Lüer Wojtek in Cologne acted as legal adviser to Westgrund. The banks were advised by Gleiss Lutz Hootz Hirsch in Frankfurt am Main. Wecken & Cie was represented by Rödl & Partner in Munich.

Based in Berlin, Westgrund buys, manages, and develops residential portfolios in growth areas in Germany. The company's medium-term plan is to expand its housing stock to between 30,000 and 40,000 apartments.