VGP Long awaited new JV partner announced for 5 German parks
This morning, VGP announced a EUR 1.1bn JV plan with DEKA Immobilien for 20 buildings in Germany. The first closing is expected by 3Q23 and we believe the full completion will come before FY24. The set-up is similar to the previous Allianz JV via 50/50 partnerships that are equity accounted for and also financed by vendor loans. The leverage will however amount to only 30% LTV at start vs. 60%. This will limit the cash return to 65%, but also protects the equity value with lower risk. VGP had flagged a JV update before 1H23 results and hinted at 3 potential partners. We believe that this is the main JV partner and maybe smaller JV's for other regions could be announced. We also believe that VGP can realize small yld gains on the JV transfers as it is not negotiating with its back against the wall after a 1bn debt issue and 300m capital increase over FY22. Total current GRI now amounts to 99.3m for its own portfolio and 166.7m for the JV's. We expected JV closings for 500m this year. That is already secured and we can raise our JV cash recycling estimate for next year and lower the debt ratio.VGP NV is a Belgium-based real estate development company that constructs and develops industrial real estate and ancillary offices, which are rented out to clients on long term lease contracts. The Company operates in three business segments: the Development activities segment is focused on the identification and acquisition of the land and development of the infrastructure, the design of buildings, the coordination of architectural and engineering aspects, the administration to obtain the necessary permits, the tendering and coordination of the construction works, including site management, and the facility management of the real estate portfolio; the Property Management and Leasing services segment is responsible for managing the operation of the buildings, and the Facilities Management services segment is responsible for managing the operation of the buildings and performs all actions, such as maintenance services, waste management services and maintenance greenery, among others.
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