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FRANKFURT, Feb 21 (Reuters) - Property company Deutsche Wohnen will issue 800 million euros ($840 million) in convertible bonds, it said on Tuesday, announcing a capital increase of 500 million euros to refinance its debt and to fund new acquisitions.
It said it is looking to buy a medium-sized residential portfolio and that negotiations are advanced but not yet concluded.
The 1.3 billion euros worth of stock and bond transactions will be used to refinance an outstanding 2020 convertible bond, to fund its Pegasus nursing home portfolio as well as to strengthen its funding for potential acquisitions, Deutsche Wohnen said in a statement.
Philip Grosse, its Chief Financial Officer, said: “We are making use of the attractive financing environment to optimise our capital structure.”
Deutsche Wohnen will use the proceeds to fund 600 million euros worth of acquisitions completed in recent months, and to build liquidity reserves for new transactions, Grosse said.
It will issue 800 million euros worth of new convertible bonds, maturing in 2024 and convertible into newly issued or existing Deutsche Wohnen bearer shares.
The new convertible bonds will be issued on or about Feb. 27. Owners of an existing convertible bond will also be invited to sell.
In 2016, the value of its investment properties was about 16 billion euros, up from 11.9 billion in 2015, the company said.
Last year, Deutsche Wohnen wrote down the value of its GSW Immobilien acquisition by about 535 million euros from the 2013 transaction.
The portfolio has been revalued by a total of 2.4 billion euros since the purchase of rival GSW Immobilien, Deutsche Wohnen said.
Its Funds From Operations (FFO) increased to about 384 million euros in 2016, up from 304 million euros in 2015, corresponding to around 1.14 euros a share.
Deutsche Wohnen will release audited full-year results on March 21, it said. ($1 = 0.9487 euros) (Reporting by Edward Taylor; Editing by Ruth Pitchford)