German convenience retail-focused Reit to list on JSE next month
CAPE TOWN - DEUTSCHE Konsum Reit-AG (DKR), a German real estate investment trust (Reit), will list on the JSE’s main board early next month with a secondary listing.
Set for March 5, the listing will be in the retail Reits sector of the JSE.
With a market capitalisation of about e557 million (R9.9 billion), the company invests in convenience retail properties in established locations in the central and regional areas of Germany outside of the major cities.
DKR is listed on a number of German stock exchanges.
Its portfolio comprises 165 convenience retail properties with a gross lettable area of about 901016m² and a market value of e829m.
Following the transfer of seven property acquisitions after the listing, the portfolio will consist of 172 convenience retail properties with a lettable area of 958 747m² and a market value of e880m.
Chief executive Rolf Elgeti said in a statement that the aim of the listing was to establish a positive relationship and reliable track record with the South African market, and to raise capital in a new market to fund further acquisitions, and increase liquidity and tradability in the shares.
Elgeti said they were initially attracted to South Africa by its deep capital markets, the understanding of the property space by the investor community and the country’s well-regulated stock exchange.
The company said that, despite the Covid-19 pandemic, DKR had shown resilience, in large part due to its investment strategy of focusing on non-cyclical retail tenants, such as large German food retailers, retail warehouse stores and drugstores, which provide “essential” services and goods to consumers.
DKR also acts as a professional investor, as the investment value per property, generally of up to e25m, was often viewed as too high for private investors or too low for institutional investors.
In this niche area, there was little competition from competing bidders, which would ordinarily drive up the purchase price of similar properties in major cities, he said.
“The experience of DKR’s management and their network, as well as the flat structure of the business, facilitates quick decision-making, further enhancing the acquisition process,” Elgeti said.
Strategic asset and portfolio management, as well as targeted investments, had enabled DKR to reduce vacancies and enter into strong lease renewals, he said.
Properties with higher vacancies and short rental contract maturities were often deliberately bought to allow DKR to exploit value-adding opportunities.
The non-cyclical retailers that form a significant portion of the tenant base were excluded from the mandatory lockdowns in Germany that applied to “non-essential” retail stores.
“We have also adopted a lean management structure,” Elgeti said.