Real estate industry | Problem landlord joins LEG

The flag does not necessarily convey the full truth. Photo: dpa/Maja Hitij The highly controversial residential real estate investor Grand City Properties (GCP) has announced that it has become the new main shareholder in LEG. Accordingly, the company headquartered in Luxembourg has acquired a 20.04 percent stake in the much larger rival LEG, which is still the largest apartment landlord in North Rhine-Westphalia. The company, which is controlled from Berlin-Tegel, announced in the middle of this week that it had acquired shares in LEG - the former state development company in North Rhine-Westphalia - with a calculated value of 700 million euros from companies in the financial sector. The entry is causing a lot of criticism from tenant advocates.

Will LEG become even more of a candidate for incorporation in North Rhine-Westphalia as a result of GCP's entry? This question also concerns the rental expert and spokesman for the Federal Working Group (BAG) for urban development and housing policy on the Left, Karlheinz Paskuda. GCP's entry doesn't bode well, he says in a phone call with "nd". »No improvement can be expected from Grand City when it comes to service and maintenance, quite the opposite.«

»No improvement is to be expected from Grand City in terms of service and maintenance.«

GCP, with housing stocks in Berlin and North Rhine-Westphalia, among others, has a rather dubious reputation among tenants and consumer advocates. Online reviews, if you believe them, are also rather negative.

According to Paskuda, both housing companies are already selling apartments “to stay afloat.” LEG from Düsseldorf is supposed to make some sales to speculators and obscure investors, says Paskuda. “The tenants of LEG and Grand City are best helped by rapid reunification,” says Paskuda.

The Tenants' Association of North Rhine-Westphalia also criticizes the GCP entry. “This is a bang and not good news for tenants,” the tenants’ association told the Funke media group. Similar to Karlheinz Paskuda, the Tenants' Association of North Rhine-Westphalia also sees GCP as one of the problematic and difficult landlords "who invest too little in their holdings."

The tenants' association also assumes that GCP will have an operational influence on LEG with its share. LEG, in turn, writes on its website that joining GCP is simply a “financial investment”. If it were a strategic investment, GCP would (be able to) get involved in day-to-day business. But that is not the case here. However, the Tenants' Association of North Rhine-Westphalia has considerable doubts about the representation. Rather, the tenant advocates even see LEG as a potential takeover candidate because of its still poor share price and are at the same time calling for the state of North Rhine-Westphalia to get involved.

However, LEG did not want to comment on “nd”’s query about its new major shareholder and possible consequences for the approximately 500,000 tenants. The LEG said on its website that the announcement had been “noted”.

For its part, GCP sees a “unique opportunity to invest in a company with a high-quality portfolio and a stable dividend policy,” its CEO Refael Zamir is quoted by the Reuters news agency. Zamir said he viewed the stake in LEG as a financial investment and could imagine increasing the stake to 29.9 percent. It is currently cheaper to take over LEG shares than to acquire new properties.

As usual, the Federal Cartel Office still has to approve the entry. To date, 87 percent of LEG was in free float. So far, Blackrock has been the largest individual shareholder with 8.1 percent, and the French asset management company Amundi and the Norwegian sovereign wealth fund are also shareholders.

Behind Grand City Properties is the also listed real estate investor Aroundtown, former main sponsor of the football club 1. FC Union Berlin, which holds 63 percent of the shares. According to Reuters, with the entry into LEG, the housing business will become Aroundtown's largest division with a share of 42 percent.

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