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Property firm Summit Germany eyes 2019 share sale - sources

[FRANKFURT]German commercial property group Summit is exploring a 2019 share sale to raise money for new investments and make it easier to trade its stock, people close to the matter said.

"The majority owner will offer shares, new shares will likely also be issued", one of the sources said, adding more than 25 per cent of the company's share capital is expected to be offered in the sale.

No firm decision has so far been taken on the size of the share sale, which may take place in the second quarter, the person said, while another source said the listing would likely take place on the Frankfurt stock exchange.

Investment bank Citi is organising the deal, while an independent IPO adviser is also helping prepare the offer, the people said.

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Summit Germany is 50.01 per cent-owned by investor Zohar Levy, who is also managing director. It has a market capitalisation of 526 million euros (S$816 million). It is incorporated in Guernsey and listed on London's AIM market, but invests mainly in German office, retail, logistics and storage properties.

In 2017, it doubled its net profit to 113 million euros, while in the first nine months of 2018 profit was flat at 96.4 million. The group's net asset value was 667.5 million euros at the end of September.

So far this year, Summit has purchased commercial properties from buyout group Fortress for 86 million euros as well as a controlling stake in GxP German Properties AG. It bought real estate assets, mainly used by Volkswagen, worth 100 million euros from Dazzle Capital a year earlier.

The company expects Germany's real estate boom to continue.

"According to the latest market reviews by leading German brokerage firms, there is a lack of supply in the German commercial market, therefore rental demand is resilient and rent levels are increasing," it said last month.

Separately, German real estate developer Gateway is also exploring a possible 2019 share sale with the help of Credit Suisse, people close to the matter said.

The 100 million euro market cap company and its majority shareholders last month pulled a planned share placement, citing volatile markets, coinciding with the departure of its chief executive, Andreas Segal.

The two share sales are expected to be organised as so-called re-IPOs, whose preparation and marketing efforts tend to be as extensive as those for an initial public offering (IPO).

Summit, Gateway and the banks declined to comment or were not available for comment.