Deutsche Annington, Germany's largest residential landlord, has had its initial public offering postponed due to "continued poor market conditions," according to backers.
Terra Firma Capital Partners, the private equity group run by British billionaire Guy Hands, owns Deutsche Annington. The German firm has a total of 180,000 residential units under its control.
According to the Financial Times, Hands aimed to raise around €1.1 billion through the IPO, valuing the company at over €11 billion, including debt.
In a statement, Deutsche Annington CEO Rolf Buch said, "Based on our good financial position, we will focus on driving our operational success, including continuing our investment and modernization program as planned." Lands end
Bloomberg says that investor demand for Deutsche Annington shares "fell short."
German stocks have been increasing until recently, but have suddenly cooled due to concerns about rising interest rates.
According to Torsten Klingner, an analyst at Warburg Research in Hamburg, Deutsche Annington "had the terrible luck of setting its price range shortly before the worldwide instability with interest rates started."
Analysts also believe that investors are losing interest in German residential real estate, which has benefited from low vacancy rates and consistent rental returns.
LEG Immobilien AG, formerly owned by Goldman Sachs Group Inc., went public in February and raised €1.3 billion in stock sales, according to Bloomberg, the largest in Germany's real estate business. Since February, the stock has lost more than 7% of its value.
Bloomberg says that two more real estate companies are considering going public. Cerberus Capital Management LP intends to sell shares in German retail buildings, and Immofinanz AG of Austria is mulling a public offering for its residential unit.
"I wouldn't read too much into the lack of demand for Annington for the other IPOs," said Peter Papadakos, a London-based analyst at Green Street Advisors. "It wasn't a question of structural demand or structure, but rather of price. Annington may return at a later date, and if the price is reasonable, it is likely to float."
In Europe, industrial property investment is on the rise.
The European property investment market had a good start to 2013, with a 77 percent increase in the volume of acquisitions in the industrial sector compared to the previous year.
According to fresh data from Cushman & Wakefield, the European commercial market had an investment volume of €32.7 billion in the first quarter of 2013, up 15.7 percent from the previous year.
At the end of the first quarter, the EMEA market had yearly volumes of €136.7 billion, up 4.4 percent over the previous year, thanks to greater debt and equity in the market.
According to the firm, the industrial market helped lead the way, with its share of the market rising from 8% in 2012 to 11.4 percent in 2013, the largest since 2010.
Deals in Central Europe, France, Germany, and the Netherlands, in particular, aided this, according to Cushman & Wakefield. "However, investors are taking a more favorable view of the sector in general, since it is seen as a potential winner from the expansion of online retailing as well as desire for increased supply chain efficiency."
According to the research organization, core European markets continue to experience the majority of demand, with investment volumes in the United Kingdom, Germany, and France increasing 32 percent year over year.
"However, a subtle shift is taking place in the market, with core nations maintaining strong interest and a large market share, but greater risk-taking as well as increasing interest in diversification developing," Jan Willem Bastijn, C & W's EMEA head of capital markets, said in a statement.
"In addition, when looking for larger lots, such as quality shopping complexes, investors will increasingly go where the stock is, which has led to increased activity in Central Europe recently."
The business anticipates a €136 billion investment volume for the year, up 4% from 2012, thanks to increased interest from opportunistic investors.