Terra Firma, the London-based private equity firm, has taken a last-minute decision against launching an initial public offering (IPO) of its German residential property company, Deutsche Annington Immobilien.
Deutsche Annington was due to be launched on the Frankfurt Stock Exchange today and was expected to be one of the largest in European real estate in recent times with a target of raising €1.1 billion. However, the plan was scrapped yesterday evening due to “adverse market conditions”. In a statement, the company said it would continue with its prior investment plan and also to evaluate the market environment.
Rolf Buch, Deutsche Annington’s chief executive, said: “Based on our strong financial position, we will focus on driving our operational performance, including continuing our investment and modernization program as planned.”
The plan to float followed the strengthening of the company’s financial position in July last year when it agreed a refinance package for €4.5 billion of outstanding CMBS debt. Debt in the company originally stood at €5.8 billion when first arranged in 2006. The CMBS arrangements were made in the wake of Deutsche Annington becoming Germany's largest housing company after taking over fellow German residential property company, Viterra, for €7 billion in 2004 giving the group some 228,000 units throughout Germany.
Terra Firma began building up Deutsche Annington into a powerhouse of a German residential property company when it acquired 64,000 residential properties in 2000 for €2.25 billion from the German Federal Railways. It now has some 190,000 properties.
The properties were originally constructed as affordable housing for employees and officials of the former state railway. Deutsche Annington’s more recent history began with the privatisation of railway workers’ residential housing companies through the German Railway Estate (BEV). It acquired these eleven companies with an approximate total of 65,000 flats in 2001.
Germany’s public real estate sector is often bemoaned for being small compared to the overall size of the country’s investible stock. However, Goldman Sachs, the investment bank and investment partner Perry Capital, the hedge fund manager, did float their German residential property company, LEG, in February, for €1.3 billion.