German resi platform plans €500m IPO

Residential platform Velero Immobilien AG is planning to list on the Frankfurt Stock Exchange with a €500m (£453m) initial raise. The business aims to pivot from third-party management to a residential property company focused exclusively on its own assets. It will sell shares at €30 per share from October 12 to October 21, with a first trading day expected on 27 October. Dutch pension investor PGGM has said it will take a 9.5% stake in the company. Velero also has an option to upsize if the shares are exercised in full, which could see it raise €550m. It will use the proceeds to complete the acquisition of two portfolios that it currently manages and to purchase a third which is currently in exclusive negotiations. These acquisitions will provide 10,000 homes in mid-sized cities in North-Rhine Westphalia, Saxony, Saxony-Anhalt and Brandenburg. The assets target lower income residents, supported by the social system and unemployment benefit schemes. Investors are increasingly turning to social housing which is supported by government grants for stable, long-term returns that are considered to be recession-proof. Blue-chip investors are pursuing a number of routes to market, from Blackstone’s acquisition of housing association Sage at the end of 2017 to recent plans this year from M&G to launch a Registered Provider in the form of a shared ownership REIT. This month, Alvarium Investments raised £241m in the first listing for a new REIT dedicated to providing accommodation to the homeless. Home REIT’s float was the largest investment trust IPO of the year and the largest UK-focused REIT IPO for more than three years. Velero was founded in 2015 by co-chief executive officers Sascha Giest and Thomas Lange. It has headquarters in Berlin and offers residential real estate services, including sourcing and acquisitions, asset, property and facility management and disposals. Citigroup is the sole global coordinator and joint bookrunner with Kempen & Co, Société Générale and Commerzbank. To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette