The Grounds Real Estate Development AG
Original-Research: The Grounds Real Estate Development AG (von GBC AG):
Original-Research: The Grounds Real Estate Development AG – von GBC AG
Einstufung von GBC AG zu The Grounds Real Estate Development AG
Unternehmen: The Grounds Real Estate Development AG
ISIN: DE000A2GSVV5
Anlass der Studie: GBC Management interview
Letzte Ratingänderung:
Analyst: Cosmin Filker, Marcel Goldmann
The Grounds Real Estate Development AG (The Grounds Group) implemented a
capital increase at the end of the most recent financial year 2017. Of the
5.1 million shares offered (subscription price of EUR2.20 per share), a
total of 2.21 million shares were subscribed (subscription offer and
private placement), thus resulting in gross issue proceeds of EUR4.85
million. The shares that are yet to be placed shall be offered in
particular to institutional investors in South Africa. The liquidity raised
has already been used as planned for the acquisition of two real estate
portfolios in order to increase the inventory. GBC Analyst, Cosmin Filker,
spoke with Hans Wittmann, a member of The Grounds Executive Board.
GBC AG: Mr Wittmann, as part of the capital increase, around 45% of the
shares offered were placed in a first tranche. How satisfied are you with
this placement and what do you expect from the discussions in South Africa?
Hans Wittmann: We have received a lot of positive feedback as part of
investor discussions in Germany and are also very pleased with the success
of the capital measure thus far. The second stage of the capital measure is
currently being implemented in South Africa. Authorisation from the South
African Central Bank (Federal Reserve) is imminent and we expect the
listing on the AltX (Alternative Exchange) in Johannesburg within the next
two to three weeks. On this basis, we can then hold concrete investor talks
in South Africa, where we have already received initial positive feedback.
GBC AG: The initial funds from the capital increase have already been
successfully used to acquire several properties. Can you outline the key
information of the investments?
Hans Wittmann: You are right. The funds from the capital increase were used
as planned and in accordance with the communicated use of funds for the
acquisition of the first existing properties. However, that is only the
beginning. This is because we are currently in concrete talks regarding
further acquisitions, the completion of which we will report in the coming
months. In this respect, our investment activities are proceeding as
planned. The properties you mentioned are primarily several multi-family
houses, which comprise a total of 120 apartments and seven commercial
properties. We will develop the properties through restructuring or
development, in order to increase their value in addition to the rental
income. We have also acquired a logistics property with significant
development potential.
GBC AG: In addition to the successful first property portfolio development,
your main focus is on project development. With this combination, The
Grounds Group stands out among listed real estate companies. Why do you
consider the combination of inventory and project development to be
promising?
Hans Wittmann: We have come to the conclusion that the broadest possible
coverage of value creation in the real estate sector brings significantly
higher earnings potential than would be the case if we only covered one
business area. In principle, we plan to develop our own real estate
portfolios. However, if we cover the development in advance, we can
determine the quality of the location, construction quality, tenant
structure, etc. early on and comparatively flexibly. Furthermore, for
several years now, there has been a clear trend in the new construction
sector whereby construction costs have fallen and are now even below
acquisition costs, which makes in-house development particularly
attractive.
You have to bear in mind that property development generally allows for
higher margins and faster realisation of profit than inventory management.
We will therefore also sell internally developed properties in individual
cases and, in doing so, profit from high returns on the project development
and the stable earnings situation from the inventory management process.
GBC AG: What projects are currently in your development pipeline?
Hans Wittmann: We have access to an extensive project pipeline, and
contractual negotiations have already begun for some projects. The projects
are both development projects and ready-made properties for the build-up of
inventory. We expect positive news in the coming weeks regarding the
corresponding contractual protections for individual projects. In addition
to the new acquisitions forming part of the capital measure that have
already been reported, our current development focus is on three projects
in Frankfurt am Main, Germany; the Blue Towers project with almost 18,000
m2 of useable area, the Microappartementanlage (micro-apartment facility)
with a total of 14,000 m2 useable area, and Boardinghouse, which is close
to the Frankfurt airport and has over 10,000 m2 of useable area.
Furthermore, we still have a housing project in Oldenburg, Germany and a
building site development in Schwarzheide, Germany.
GBC AG: You are planning a medium-term expansion of the current portfolio
to over several hundred million euros. How will this seemingly ambitious
target volume be financed?
Hans Wittmann: In principle, we can use a variety of financial instruments.
However, it’s important to bear in mind that we will be financing the
projects with an average equity ratio of around 25% so that we are able to
cope with high investment volumes. Equity at property company level can be
entirely provided by borrowed capital at holding company level. In future,
we will therefore also make use of borrowed capital and equity instruments
at holding level, in addition to bank financing at project level. We can
also implement a portfolio expansion comparatively quickly through capital
increases for a contribution in kind.
GBC AG: Mr Wittmann, where do you see The Grounds Group in five years’
time?
Hans Wittmann: In five years’ time, we want to significantly expand our
market position in the listed developers segment and thus become one of the
leading companies in this segment. Our unique approach, which covers the
highest possible value creation and the resulting combination of stable
income and high earnings potential, should allow for corresponding growth.
We are also aiming to establish a sustainable dividend policy, provided
that we successfully conclude the investment cycle.
GBC AG: Mr Wittmann, thank you for talking to us.
Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/16119.pdf
Kontakt für Rückfragen
Jörg Grunwald
Vorstand
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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http://www.gbc-ag.de/de/Offenlegung.htm
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