Listed German property developer and manager VIB Vermögen AG, which is the subject of a takeover offer by DIC Asset AG, is continuing to recommend to its shareholders to reject the offer, which it describes as "uninvited", not representing an "acceptable control premium", and not reflecting the growth potential of the company with its established strength in the logistics sector.
VIB, based in the Bavarian town of Neuburg an der Donau, is fending off the takeover bid from DIC Asset, which currently holds a 21% stake in VIB and is striving to reach a 51% majority shareholding and then to fully consolidate VIB in its own figures.
VIB owns 114 properties, mainly in southern and south-western Germany, with a balance sheet value (September 2021) of €1.4bn. The rental space of just under 1.3 million sqm is concentrated in the asset classes logistics/industry (71%), specialist retail centres (13%) and DIY and garden centres (13%). In recent years, the company has expanded primarily through its own developments, and currently has a development pipeline of 160,000 sqm.
In its latest statement on 26th February based on preliminary financial figures, VIB closed its financial year with strong numbers. Revenues rose by 10.2% from €94.2 million to €103.8 million based on increasing rental income from completed development projects. Due to scaling effects and further savings in interest expenses, adjusted earnings before taxes (EBT) and funds from operations (FFO) rose disproportionately to revenue growth to €66.7 million (+15.6%) and €58.4 million (+16.0%), respectively.
VIB said it expects rental income of around €14 million alone on completion of the six development projects currently under implementation, which corresponds to a rental return of between 6% and 7% based on investment costs of around €220m.
DIC Asset sees VIB's portfolio as "highly complementary" to its own. The takeover could strengthen its presence in southern Germany, it says, while VIB's 40 logistics experts would fit in well with its team. In particular, VIB's development pipeline, including some huge projects close to Munich, is likely to be very attractive to DIC, which last year started a major new push into the logistics sector, kicking off by acquiring logistics specialists RLI Investors.
CEO Sonja Wärntges said in September last year, "About one and a half years ago, we decided to increasingly include logistics properties in our portfolio, and I am convinced that our timing was right. Of course, yields have gone down significantly. But there will continue to be demand for the space."
From her comments, it was clear that DIC's focus was as much on the sustainability of the logistics assets she wanted to buy, as on their prominence and 'shinyness'. The company's goal is to increase the proportion of 'green properties' from its current level of around 11% of the market value of its commercial portfolio to around 20% by the end of 2023 - about the most, realistically, it could achieve because of lack of adequate supply of new assets coming on to the market.
DIC is offering VIB shareholders €51.00 per share, with the offer valid until March 18th. After steadily rising over the past year, the VIB share price is currently trading at just under €50.00.
DIC said it is planning to fund its takeover, if successful, with €300m of its own cash along with a bridging loan, and longer-term with a small capital increase and further borrowings.
