European private residential real estate company Vonovia, headquartered in Germany, has agreed to sell an almost 30 percent stake in its Südewo residential portfolio to global alternative asset manager Apollo for €1 billion.
The transaction values the Südewo portfolio at €3.3bn on a debt free and cash free basis, implying a discount below 5% to its fair value as of December 31, 2022, and below 6% to the fair value as of June 30, 2022, said the company in a press release.
Apollo will invest in the portfolio for its affiliated and third-party insurance clients and other long-term investors.
CEO Rolf Buch commented, “We are pleased to have these word-class, long-term insurance and institutional partners for our Südewo portfolio. The transaction demonstrates the attractiveness of German residential rental income in general and our portfolio in particular. It is also a significant step in reaching our full-year disposal targets.”
Vonovia will continue to control, operate and consolidate the portfolio, which comprises more than 21k residential units in locations across the southwestern state of Baden-Württemberg.
With the proceeds, Vonovia generates ~50% of the targeted €2bn free cash flow from asset disposals to which the company committed for 2023E.
The transaction has no material impact on Vonovia’s near term Group FFO per share or NTA per share, said Vonovia.
Vonovia intends to use the proceeds for liability management and to cover upcoming debt maturities, with the company’s LTV expected to be reduced by 1 percentage point to 44.1% and Net debt / EBITDA by 0.3x to 15.5x.
Closing of the transaction is expected to occur around May 31, 2023 and is subject to further conditions such as the absence of material adverse changes and regulatory clearances.
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