Volume 7, Issue 125, October 3rd 2014 Lone Star set to float commercial Inside REFIRE property specialist TLG Immobilien REFIRE is a specialised report focused on providing market intelligence and back- Now it’s official. After months of speculation, much of it public, the eastern Ger- ground analysis to finance professionals man commercial property specialist TLG Immobilien announced that it plans to in German and continental European real float on the stock market, with its launch set for before the end of this year. TLG’s estate investment. parent company, the US private equity investor Lone Star Group looks like it’s making hay while the sun shines, figuratively. If it happens soon, the launch on Whatever your particular area of speciali- the Prime Standard of the Frankfurt Stock Eschange will follow on from two big sation, we think you’ll find timely, incisive recent internet IPOs (shoe and textile online seller Zalando, and Rocket Internet) information within our pages, helping to in- and relative recent strength across the German listed property sector. form you of the key deals, the numbers, the markets, the players and the people. Issues of new shares should bring in Share buyback at TAG Immobil- €100m for further acquisitions, and it is ien sends strong market signal The areas we focus on are: expected that Lone Star will be looking Much in the news this month has been to raise €500m from its part-flotation. the Hamburg-based listed residential US Funds in Europe Lone Star bought the commercial di- property investor TAG Immobilien AG, European REITs vision of the former Treuhand Liegen- which announced a huge share buyback German Real Estate Finance schaftsgesellschaft from the German program and the imminent departure of German Non-Performing Loans (NPLs) government two years ago for €1.1bn, its star CEO Rolf Elgeti, see page 3 Retail Property Funds including €594m in equity, with the rest Mortgage Securitisation being debt. Deutsche Bank launches new CMBS/RMBS TLG has a mixed portfolio of commer- €700m open-ended fund Privatisations cial properties, including high-profile as- Deutsche Bank subsidiary Deutsche Refinancing sets such as the Kulturbrauerei and the Asset & Wealth Management (formerly Euro-zone Property Financing ‘Spreestern’in Berlin, as well as Dresden’s RREEF) is launching a new €700m Ger- Hotel de Saxe and retail property Zwing- man open-ended real estate fund, the REFIRE has an extensive network of con- er Forum. Prominent blue-chip tenants Grundbesitz Fokus Deutschland. The tacts in the field of continental European include Daimler and software firm SAP, launch date is 1st October. see page 12 real-estate finance, which enables us to along with several government-backed bring you the latest and most relevant news. organisations. Average remaining lease Deutsche Annington joins However, we always want to know more duration is 8 years, and the (EPRA-de- MDAX, adds 5,000 new units about what’s going on in this dynamic sec- fined) vacancy rate is a low 4%. About Germany’s largest residential housing tor, so make sure your company is keeping 35% of its rental income comes from re- company, the listed Bochum-based us informed of your moves. Send your me- tail grocery stores, such as Edeka and Deutsche Annington, took a step closer dia communications to news@refire-online. REWE as well as discounters Aldi and to its long-term goal when it entered the com for our consideration. Lidl. The group’s real estate assets are MDAX at the end of September – the sec- now valued at about €1.5bn and it gener- ond tier of Germany’s largest listed com- ates annual rental income of €118m. panies. The MDAX consists see page 19 CONTENTS in this Issue: With solid cashflow and a conserva- tive approach to its financing, TLG earns German distressed real es- DEALS ROUNDUP / from page 3 a 7.3% FFO yield on its net asset value tate debt on the rise - Study EDITORIAL / page 4 (EPRA NAV) with FFO for the first six The amount of distressed debt in Ger- REPORT - /ROUNDUP page 10 months of this year being €26.0m, up many’s real estate sector is set to rise UPCOMING EVENTS / page 29 6.6% on last year. The company said it modestly, largely as a result of postponed PEOPLE…JOBS…MOVES / planned to pay out 70-80% of its FFO in transactions in the recent past, concludes SUBSCRIPTION FORM / page 34 dividends. the annual “Survey on Real Estate Financing The net proceeds generated by the IPO and Distressed Real Estate Debt in Germa- will be used to finance ‘accretive acquisi- ny”, carried out by Corestate see page 14 2 ................................................. DEALS ROUNDUP tions’ in line with TLG’s stated strategy to the Berlin government had stumbled a REFIRE expand the office and retail portfolio in its couple of times in its attempts to priva- Real Estate Finance core regions of Berlin, Dresden/Leipzig, tise the whole TLG entity in the preced- Intelligence Report Europe and Rostock on the Baltic coast, where ing couple of years. it has been active for 20 years since re- Lone Star bought the commercial as- unification, as well as sets and TAG Immo- Operating Office for “value-enhancing in- bilien the residential REFIRE “The core portfolio Habsburgerallee 95 vestments into the com- consists of 320 prop- assets from the old 60385 Frankfurt am Main, GERMANY pany’s core portfolio”. erties, many of them Treuhand property Tel: +49-69-49085-785 Victoria Partners business, which by Fax: +49-69-49085-804 upgraded, with a rental Email: [email protected] is acting as indepen- yield of 7.5%. About then had had twenty dent IPO adviser and half the core portfolio years to turn itself into Managing Editor: process coordinator for a well-managed com- Charles Kingston comprises office (36%), Tel: +49-69-49085-785 TLG Immobilien. Banks retail (50%) and ho- pany focused on its Fax: +49-69-49085-804 JP. Morgan and UBS tel assets (15%), with traditional eastern Ger- Cell: +49-172-8572249 will act as joint global man heartland. Email: [email protected] about half in Berlin” coordinators and joint REFIRE has Subscriptions: bookrunners, while Kempen & Co, Com- visited the company at its Berlin head- Tel: +49-69-49085-785 merzbank and HSBC have also been quarters on a number of occasions going Fax: +49-69-49085-804 Email: [email protected] mandated as joint bookrunners. back a few years – the company in our Over this year’s third quarter, TLG view has taken admirable pains to ex- Advertising: bought two further core office assets, in- plain its evolving strategy and its financial Tel: +49-69-49085-785 Fax: +49-69-49085-804 creasing the value of its core portfolio to foundations to its diverse stakeholders, Email: [email protected] €1.4 bn. At the same time it sold 48 non- who are now about to include a range of core properties with an aggregate value private and institutional investors. Editorial Advisory Board: Klaus H. Hausen of €70m, the company said. The remain- REFIRE met recently with finance di- Colm O’Cleirigh, B.Arch.Sci. ing non-core assets, valued at €100m, rector Peter Finkbeiner in his office to Margarete May, Rechtsanwältin are marked down to be sold in the near discuss TLG’s approach to financing. David Scrimgeour, MBE Christian Graf von Wedel future. Finkbeiner’s banking and private equi- Glenn J. Day FRICS The core portfolio now consists of 320 ty background left little doubt that the Andreas Lehner properties, many of them upgraded, with finance function within TLG has clearly Stefan Engberg, MRICS an in-place rental yield of 7.5%. About been streamlined and simplified since Publisher: half the core portfolio comprises office the Lone Star takeover, with (presum- REFIRE Ltd., (36%), retail (50%) and hotel assets ably) clearer lines of reporting to a pri- 49 Sandymount Avenue, Ballsbridge (15%), with about vate equity parent than to Dublin 4, Ireland half located in Ber- the myriad political inter- lin. When Lone Star ests that had to be kept in Real Estate Finance Intelligence Report Europe bought the portfolio the loop in the old state- (REFIRE) is published 22 times a year, at the be- ginning and in the middle of each month, with two years ago it had owned days. It was very two holiday breaks. REFIRE is editorially inde- 780 assets across refreshing. pendent of any selling or investing institutions. In- the full commercial Finkbeiner described formation contained in REFIRE is under copyright protection and is based on sources believed to property spectrum. what almost sounds like a return to be reliable, though their complete accuracy can- the old days of relationship banking – not be fully guaranteed. Neither the information REFIRE: This looks like a very lu- having deeper and more reliable rela- contained in REFIRE nor the opinions expressed therein constitute or are to be construed as con- crative part-exit for Lone Star, who are tionships with a handful of banks who stituting an offer or solicitation of an offer to buy likely to hold on to a good chunk of TLG understand your business and who can or sell investments. REFIRE accepts no liability even after the capital raising and IPO. react quickly in competitive situations. for actions based on the information herein. TLG Immobilien has been trimmed, His views underpin the argument that © 2014 REFIRE Ltd. slimmed and focused since Lone Star German banks are getting back into bought the group two years ago, after the driving seat and seeking closer re- 3 www.refire-online.com The 1st Annual REFIRE German-Chinese Real Estate Forum REFIRE is bringing top German real estate companies to Hong Kong and mainland China to meet with outbound Chinese investors.