Residential specialist Velero gears up for German IPO

Velero Immobilien, a provider of property management services in the residential real estate market in Germany, has unveiled plans to list on the regulated market of the Frankfurt Stock Exchange.

The planned listing is expected to be completed by the end of 2020, subject to market conditions. Ahead of the listing, the company will issue new shares from a capital increase offered to institutional investors in the form of a private placement.

The company said it would use the net proceeds from its offering to transform into an independent real estate platform through the acquisition of three property portfolios it has earmarked, and by completing on its accretive acquisition pipeline.

The three portfolios comprise a total of 10,189 residential units mainly located in mid-sized cities in North-Rhine Westphalia and East Germany which have been successfully managed by Velero and its affiliates since 2016.

According to the firm, the portfolio carries substantial upside potential which Velero plans to unlock with 'hands-on asset management and the envisaged execution of an extensive investment plan', according to the firm.

Sascha Giest, Co-CEO and chief financial officer of Velero said: 'We believe that German residential real estate markets in mid-sized cities will show further dynamic growth in the future. Particularly, during the months of the Covid-19-crisis, these markets proved to be relatively resilient.

'Moreover, our properties provide affordable and quality living space to households in the low-to-mid income range. In our opinion, this part of the market is particularly resistant to adverse effects from a possible economic downturn, especially when compared to the higher end of the market. In addition, the size range of our apartments suits the trend towards smaller households well.'

Velero’s said that its value add approach provided room for relative outperformance and would be supported by favourable market fundamentals, especially in B-locations. The company also suggested it would benefit from a positive political and macroeconomic environment for real estate in Germany.

The identified portfolios combine more than 680,000 m2 of space and are currently generating an average rent of €5.01 per m2, implying a gross yield of 5.0%, Velero said. They comprise flats ranging from 45 m2 to 90 m2.

Thomas Lange, Co-CEO and chief investment officer of Velero, said: 'The average contract rent of both the initial portfolios and the additional portfolio in various locations is below the current market level.

'In combination with a significant potential to reduce the existing vacancyand increasing demand in the target markets we believe there will be a strong upside potential for our company. Our experience in asset management of residential assets and our deep knowledge of the Initial and the additional portfolio give us great confidence to realize embedded value and capture further growth opportunities.'


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