ADO seeks further expansion in Berlin

Shlomo Zohar  photo: Tamar Matzafi

Subsidiary ADO Propertiesrecently raised €100 millionthrough a private placement in Frankfurt.

Real estate company ADO Properties continues to expand its activity in residential property in Berlin. The company recently raised €100 million on the Frankfurt Stock Exchange through a private placement with several financial institutions.

Parent company ADO Europe Ltd. (TASE: ADO) invested €37 million in the placement, in line with its holding, thereby maintaining its proportional stake in the subsidiary, which issued 3.5 million shares, representing less than 10% of its share capital before the placement.

ADO said it would use the proceeds to finance further activity, including the purchase of residential portfolios in Berlin.

CEO Rabin Savion said, "We are very pleased with the strong support from our existing shareholders in this capital increase and warmly welcome our new investors in ADO Properties, the only listed pure play Berlin residential real estate company. We will continue to focus on the Berlin residential market and creating strong like-for-like growth, with high returns from targeted capex investments and privatisations.

"In the last nine months since our IPO, we have acquired additional residential properties in Berlin for approximately €220 million. Following our equity issue and in combination with our existing cash we have now the necessary resources to continue our growth path and can acquire up to €300 million in additional properties before reaching our maximum leverage target of 50%."

Chairman Moshe Lahmani and vice-chairman Shlomo Zohar said, "We continue to be very positive on the long-term growth perspective of the Berlin residential market and are fully supportive of ADO Properties' corporate strategy and growth plans."

Bank of Jerusalem Brokerage said following the placement, "The prices at which transactions in residential portfolios in Berlin are being carried out are no longer cheap," adding, "It seems that the intention of the parent company is to continue making substantial deals that will raise the chances of it being eventually acquired by one of the major income producing real estate companies in Germany."

Last July, ADO, of the Shikun & Binui Holdings Ltd. (TASE: SKBN) group, controlled by Shari Arison, raised €415 million through the flotation of subsidiary ADO Properties, which handles its activity in rental properties in Berlin, on the Frankfurt Stock Exchange.

Since the flotation, the subsidiary's share price has risen 45%, and it has a market cap of over €1 billion. ADO's own share price strengthened by 12% on the Tel Aviv Stock Exchange, giving it a market cap of NIS 1.4 billion.

In 2015, ADO doubled its annual revenue to NIS 326 million, helped by the sale of a condominium for NIS 43 million. The company's gross profit jumped by more than 80%, to NIS 240 million.

ADO also benefitted from upward revaluations of its assets, by NIS 672 million, and its operating profit doubled to NIS 868 million. A 330% rise in its finance expense to NIS 256 million cut its net profit by 55% to NIS 143 million.

Published by Globes [online], Israel business news - www.globes-online.com - on April 26, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Shlomo Zohar  photo: Tamar Matzafi
Shlomo Zohar photo: Tamar Matzafi
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