Euro on Sunday reveals: Vonovia, Deutsche Wohnen & LEG Immobilien: Schaffe, schaffe, Husle build | message
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by Jrg Lang, Euro on Sunday
The valuation of own properties is lower than the cost of new construction. And ultimately, interest rates are at a record low. The companies have long adjusted their real estate financing to the low level. Thanks to the European Central Bank’s bond purchase programs, interest rates on corporate bonds with good credit are now also on the way down. This also makes corporate financing cheaper. Vonovia has just placed a ten-year bond with one percent interest cost. Not an isolated case. The large difference between interest paid and rental yields is a strong driver for expanding the portfolio.
The leverage is particularly high when taking on property developers. Because it is not clear whether the apartments can also be sold, developers have to pay high interest, especially for funds that replace equity. If these funds are now provided by real estate companies that can use the new buildings to build up the portfolio and that can be refinanced cheaply, high levels of leverage arise. It is therefore no wonder that German living has incorporated the developer Isaria Wohnbau and Ado Properties at Consus Real Estate Have become majority shareholders. The next candidate on the buying lists could Instone Real Estate be. The leverage here is particularly high. The market value is 800 million euros. The analysts observing the value have calculated that the net asset value of only the strapped pipeline would already be more than 1.3 billion euros. And that already includes comparatively high interest rates. Heit: A real estate company with low interest costs could be a premium of 50 percent pay for a takeover, and yet the business would pay off brilliantly.
Our columnist Jrg Lang has been dealing with stocks since 1988.
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