Europe’s largest real estate company is under construction
If successful, the newly born giant would own 550,000 apartments in Europe, including 160,000 in Berlin alone.
Real estate company Vonovia is preparing its third attempt to merge with Deutsche Wohnen, and this time they are offering more money. If the deal goes through, the juggernaut that emerges will become the largest real estate group in Europe.
The two companies made the announcement last Sunday, with the Vonovia offer 19 billion euros for the repurchase. This means that Deutsche Wohnen shareholders are expected to receive 53 euros per share, which is one euro per share more than their last offer.
The third time is the charm?
Vonovia’s previous attempt took place at the end of July, but too few Deutsche Wohnen shareholders accepted the offer. The buyer could only secure about 47% of equities, only 3% of their benchmark.
If the merger were to go through, the newly born company would own 550,000 apartments in Europe, with 160,000 in Berlin alone.
As part of the merger plan and in an effort appease BaFin, German financial regulator, the two groups have proposed to the state of Berlin to limit rent increases until 2026, to build new apartments and to sell existing apartments to the state. That implies around 20,000 homes.
It should be clear by the end of September whether the merger with Deutsche Wohnen will go through.
The merger may be triggered by a referendum on the expropriation of Deutsche Wohnen
Meanwhile, the citizens’ initiative Deutsche Wohnen & Co. Enteignen (Expropriated Deutsche Wohnen and Co.) waged a successful campaign to raise the question of whether the large real estate company should be expropriated in a referendum in Berlin. The vote will take place in September, during the German super-election (election for the 20th Bundestag and regional elections in Berlin and Mecklenburg-Western Pomerania).
Expropriate Deutsche Wohnen and Co. activists campaign across Berlin.
The referendum concerns expropriate the property of owners who own more than 3,000 apartments. The group sees them as a major contributor to the current housing shortage in Berlin.
According to the referendum group, Deutsche Wohnen is infamous for providing miserable living conditions to their tenants, such as faulty heating, in order to force them out of their apartments. Once done, they can renovate them and resell them, pursuing a policy of ever higher rents.
The expropriated Deutsche Wohnen (not to be confused with Deutsche Wohnen and Co.) expressed a very critical look at Vonovia too. They claimed the company has repeatedly cut rental property maintenance services for socially vulnerable people in order to save money.
While the merger taunts the tenant movement in Berlin, it also offers politicians an uncontroversial compromise in the form of 20,000 apartments. This, however, is miles from what the nearly 400,000 signatories of the referendum petition are calling for.