German property investor Phoenix Spree Deutschland eyes London listing
By Esha Vaish
(Reuters) - Phoenix Spree Deutschland plans a stock market listing in London, as the residential property investor seeks to allow its existing shareholders to trade their shares more easily while also attracting new investors.
The company does not plan to raise any fresh funds through the listing, with admission to the London Stock Exchange expected on or around June 9, but said the float would allow it to tap the large amount of UK capital looking to enter the German market.
Phoenix Spree declined comment on how much equity would be sold as part of the offering but said major shareholder PMM Partners had volunteered to a 12-month lockup. Around 95 percent of the firm's investors are based in Britain.
"Although we won't be raising any fresh capital, we do expect to bring in institutional investors into the fund as some of our existing investors look to exit their holdings," founding partner Mike Hilton, also a director of PMM Partners, told Reuters.
Germany's huge residential property market, which includes companies such as Deutsche Annington and Deutsche Wohnen , has seen a string of flotations and deals as cheap credit, a lack of supply and relatively low real estate valuations draw in investors.
Rents have shot up by as much as 40 percent since 2007 in cities such as Berlin, Hamburg and Munich.
"Rents and capital values are expected to show structural growth with rising housing demand outpacing supply. High affordability levels offer scope for further upside," wrote Conor Finn, an analyst at Liberum Capital which is acting as sole sponsor for the listing.
Phoenix Spree, which owns 114 German properties, intends to spend 75 million euros ($84 million) in the medium- to long-term buying additional real estate in Berlin and other German cities such as Hanover, Bremen and Nuremberg. The company aims to deliver a total return of up to 10 percent.
Hilton said he expected the company to attract a valuation above its net asset value of about 144 million euros.
"The peer group is trading at a premium at the moment of about 25 percent to net asset value, so ... there are all good arguments to say they we should trade at or above net asset value," said Hilton.
PMM Partners and connected parties hold about a 13 percent stake, with the rest being owned by individual investors.
(The story corrects paragraph 3 to say around 95 percent of the firm's investors are based in Britain, not outside Britain)
(Additional reporting by Nishant Kumar in London; Editing by Sinead Cruise and David Holmes)
