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An overview of the grounds of the Johannesburg Stock Exchange (JSE). Photo: Gallo Images / Sydney Seshibedi
- German real estate company DKR is set to be listed on the main JSE directory next month.
- DKR has a market capitalization of just under R10 billion.
- CEO Rolf Elgeti says the company was attracted to its “deep capital markets” and investors’ understanding of the property space.
German real estate company Deutsche Konsum REIT-AG (DKR), which is set to be listed on the JSE’s main board on March 8, says it wants to establish a track record in the South African market and raise new capital for future acquisitions, among others. things.
DKR is set to make a sublist on the main JSE board on March 8, Business Insider reported last week. This comes at a time when the main stock exchange in the country has been losing one price after another, especially in 2020.
It also happens during the period when the real estate sector is not exactly the flavor of the market week.
The index of listed properties in SA is down 37% since the beginning of 2020. Its performance in the last five years is even more terrible, as it is down almost 60% from the record highs recorded in December 2017.
In announcing its intention to go public on Monday, DKR, which has a market capitalization of approximately € 557 million or approximately R9.97 billion, said it wanted to establish a track record in the South African market and raise new capital for future acquisitions, among other things.
“The company was initially drawn to South Africa because of its deep capital markets, the investment community’s understanding of the ownership space and its well-regulated exchange,” said DKR CEO Rolf Elgeti.
He added that he believed that DKR would give South African investors a good opportunity to participate in the company’s income and capital growth potential, an asset that is unaffected by South African macroeconomic cycles.
DKR invests in convenience retail properties in well-established micro-locations in Germany’s central and regional areas outside of major cities, the company said in the statement. It is listed on various German stock exchanges.
Its real estate portfolio consists of 165 convenience retail properties with a market value of € 829 million or R14.8 billion. The company will soon add seven new properties to its portfolio, all of them shopping centers of convenience.
The focus on convenience retail appears to have protected DKR against some of the challenges local homeowners face due to Covid-19. The company’s business update for its first quarter 2021 published last week showed that it increased rental income by 32% to € 16.2 million in the three months to December 2020.
The company said in that update that despite the current lockdown in some parts of the German retail sector, there have been no significant rental deferrals or rental losses from its tenants.
But DKR’s debt levels could be higher than what South African investors are comfortable with with a loan-to-net-value (LTV) ratio of 51.6%. Listed real estate companies in South Africa are currently under pressure to reduce their LTVs below 40%.
