Branicks - comment
€94m in additional liquidity at Branicks is good news for investors.
However, we are surprised at the timing of another sale from Branicks to VIB. VIB has a strategy of diversifying away from Logistics, but we expect Branicks has done some arm-twisting to push the sale of these office buildings through.
VIB’s AGM (14 August) has two resolutions requesting that a special auditor be appointed to investigate transactions between Branicks and VIB. The VIB supervisory board has responded and recommended that the request be rejected. The transaction is structured as a sale of equity, which is common in German real estate. We estimate that the yield on these assets is around 9%, but it could be lower if the bank’s LTV is >40%.
The €94m equity sale implies a Yield of 9% (€16m rent @9% = €177m, bank debt at 40% LTV = €71m => equity of €106m, we assume 89% of that equity is held by Branicks => €94m in proceeds).