Reuters – Deutsche Annington Revives IPO

Deutsche Annington, a German residential real estate company, is making a fresh attempt at a stock market listing, writes Reuters. The firm, majority-owned by private equity company Terra Firma, said the initial public offering would seek to raise 575-592 million euros ($740-762 million) versus an initial goal of up to 1.2 billion euros, writes Reuters.

Reuters – Deutsche Annington, Germany’s largest residential real estate company, is making a fresh attempt at a stock market listing, cutting the money it hopes to raise and the price of its shares, a week after poor demand forced it to scrap its original plans.

The firm, majority-owned by private equity company Terra Firma, said on Tuesday the initial public offering (IPO) would seek to raise 575-592 million euros ($740-762 million) versus an initial goal of up to 1.2 billion euros.

After a strong start to the year, Europe’s IPO market has show signs of faltering recently amid volatile equity markets.

Deutsche Annington said it was offering institutional investors 34.8 million shares in a price range of 16.50 euros to 17 euros ($21.23-$21.87), down from a previous range of 18 euros to 21 euros.

The new range values the group, which owns 180,000 apartments, at up to 3.8 billion euros, well below its net asset value of 4.25 billion euros, and at a discount to many peers, which have been trading close to their net asset value.

Deutsche Annington is set to book gross proceeds of 400-412 million euros from the offering, which it plans to use to refinance its business.

“A successful IPO enables us to accelerate the diversification of our funding”, Chief Executive Rolf Buch said.

Deutsche Annington, formed by star private equity investor Guy Hands in 2001, plans to issue unsecured bonds with lower interest coupons than what it pays for the commercial mortgage-backed securities it issued in 2006.

The precondition for a such step is receiving a BBB rating, which Standard&Poors has indicated Deutsche Annington could get if it cuts its debt by 400 million euros to 5.2 billion euros.

The bookbuilding process will take place on Tuesday and Wednesday, with the final placement price announced on Wednesday and trading set to start on Thursday.

Germany’s relative economic strength and low investment yields in other asset classes, such as government debt, have sparked a revival of interest in the property market.

LEG Immobilien was the first German property company to list its shares this year, raising 1.3 billion euros in January.

The European property sector has also seen a string of flotations this year, including British estate agency Countrywide, British housebuilder Crest Nicholson and Polish real estate group PHN.