Deutsche Wohnen is a listed German residential property company based in Berlin. The company owns around 163,000 flats and 2,600 commercial properties. There are around 111,000 flats in Berlin. The property portfolio also includes care facilities and assisted living units (source: Wikipedia).
On 14 November 2011, Deutsche Wohnen publishes an interesting document. 20 million new Deutsche Wohnen shares are offered to investors. The risks include the following:
"We could be exposed to risks from contaminated sites such as war munitions, soil conditions and pollutants in building materials, as well as possible breaches of building law.
It is possible that properties we own or acquire may contain soil contamination, hazardous materials and other substances. Contaminated sites and/or war relics (including potentially unexploded ordnance). In addition, building components may contain hazardous substances ("polychlorinated biphenyls (PCBs) or Asbestos), or the properties could entail other environmental risks.
Financial risk if contaminated sites such as asbestos are discovered
We bear the risk of cost-intensive remediation measures and the removal of such munitions of war, hazardous substances, contaminated sites or soil contamination. The discovery of such contaminated sites, particularly in connection with the letting or sale of properties, may also trigger claims for rent reduction, damages and other breaches of warranty or termination of the letting.
The removal of contaminated sites and the associated additional measures could have a negative impact on our business and result in significant additional costs.
In addition, we are exposed to the risk that it may no longer be possible to assert recourse claims against the polluter or the former owners of the properties.
Negative effects on property prices even in the case of mere suspicion
The existence or even the mere suspicion of the existence of war material, hazardous substances (asbestos), etc., residual pollution or soil contamination can have a negative impact on the property price or our ability to rent or sell the property. Residual pollution or soil contamination can have a negative impact on the property price or on our ability to rent or sell the property.
Our business is also exposed to the risk of non-compliance with building regulations or environmental requirements. Even if we carry out thorough inspections when acquiring individual properties, there is a risk that building regulations or environmental regulations have not been complied with.
These circumstances may lead to additional costs and have a negative impact on our sales revenue."
Public housing companies such as degewo also prefer to conceal the issue of asbestos. Frank Bielka used his position as state secretary and degewo managing director to keep the asbestos contamination of the state-owned housing companies secret from tenants. In the Senate, he trivialised the asbestos hazard.
Uncovering contaminated sites such as asbestos is not in the interests of landlords such as Deutsche Wohnen or Degewo.
Source: Deutsche Wohnen