'The people of Berlin are not happy': German housing giants agree to limit rent hikes
Germany's top property group Vonovia says it will sell around 20,000 apartments to the city of Berlin and limit rent increases in the capital following a planned 19-billion-euro merger with rival Deutsche Wohnen.
"The people of this city are not happy with our companies and the current state of the housing market, so we need a new start," said Vonovia CEO Rolf Buch at a joint press conference with Berlin mayor Michael Müller.
In a move which Müller called "hugely significant", Vonovia and Deutsche Wohnen pledged to limit rent hikes until 2026 in Berlin, which has been hit for years by runaway prices and a lack of affordable housing.
Vonovia said it had agreed to cap rent increases at one percent per year in the next three years, and also offer the city government 20,000 apartments.
The merger, announced late Monday, comes in the midst of a fierce ideological battle over housing in the German capital.
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The Berlin government's flagship rent freeze policy was recently thrown out by Germany's highest court, while tens of thousands have signed a petition to expropriate assets from major property companies.
In the capital, where around 85 percent of residents are renters, Deutsche Wohnen and Vonovia play a premier role in the housing sector.
Vonovia has 10 percent of its portfolio in Berlin, while Deutsche Wohnen is by far the city's biggest player with 70 percent of its properties in the capital.
The merger between the two companies will give birth to a giant of more than 500,000 homes.
The proposed deal comes after two previous attempts failed to come off, the last having been rejected by Deutsche Wohnen in 2016.
But this latest offer prices Deutsche Wohnen shares at well above their current market value, which stood at €44.99 at close of trade Friday on the Frankfurt exchange.
Deutsche Wohnen shareholders will be offered €53.03 per share: 52 in cash and the rest as the company's dividend for the 2020 financial year, said the statement.
The previous purchase offer in 2016 saw Deutsche Wohnen oppose the merger, saying the proposed price was too low.