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ADLER Real Estate AG: ADLER Real Estate AG has secured takeover of majority in WESTGRUND AG

ADLER Real Estate AG / Key word(s): Offer

2015-02-16 / 16:32

Corporate News

ADLER Real Estate AG has secured takeover of majority in WESTGRUND AG

- Move creates the fifth-largest listed residential real estate company in Germany

- WESTGRUND anchor shareholders irrevocably committed to accept the takeover

- Takeover against cash payment and new ADLER shares

- Offer currently corresponds to a price of approximately EUR 5.00 per WESTGRUND

- Considerable potential for synergies in the amount of approximately EUR 20 million
  over the next three years expected

- The combined group will have an estimated LTV of approximately 67 percent;
   interests on liabilities (WACD) to be reduced to c. 3.9 percent

- New group has an EPRA NAV of EUR 14.60 per share

Hamburg, Germany, 16 February 2015. ADLER Real Estate AG, Frankfurt/Main, Germany, (ISIN DE0005008007) has secured the takeover of a majority of WESTGRUND AG, Berlin, Germany, (ISIN: DE000A0HN4T3) by way of irrevocable undertakings, thus creating the fifth-largest listed residential real estate company in Germany by units. The takeover will be carried out through a voluntary public takeover offer in adherence to the German Securities Acquisition and Takeover Act (WpÜG). Afterwards, WESTGRUND shareholders will be offered a combination of cash component and newly issued shares of ADLER. The decision to submit the voluntary public takeover offer was approved today by both the Management and Supervisory Boards of ADLER. The transaction's financing has been fully secured. Furthermore, WESTGRUND's anchor shareholders, holding a joint share of just over 50 percent of WESTGRUND's share capital, have already executed a binding undertaking to accept ADLER's offer. The transaction is scheduled for completion by the middle of the year.

In detail, ADLER will offer WESTGRUND shareholders 0.565 new no-par value bearer shares of ADLER Real Estate AG with a calculated par value of the share capital of ADLER of EUR 1.00 each and an additional cash payment of EUR 9.00 for every three WESTGRUND shares. Based on the closing price of 13 February 2015 the offer corresponds to a price of approximately EUR 5.00 per WESTGRUND share. The newly issued ADLER shares will carry the right to participate in the company's earning as of 1 January 2015 and will be issued through a capital increase by payment in kind once approved by the general meeting. The compensation and the specific exchange ratio are expected to be confirmed by the German Federal Financial Supervisory Authority (BaFIN).

"The takeover of WESTGRUND AG offers the opportunity to generate considerable potential for synergies amounting to approximately EUR 20 million over the next three years," says Axel Harloff, CEO of ADLER Real Estate. Both ADLER and WESTGRUND have almost similar business models and strategies and share the aim to build a considerable property portfolio in Germany targeting B- and suburban areas of German metropolitan regions and contributing a positive cash flow after deduction of all recurring costs. ADLER currently owns and manages in excess of 31,000 units; WESTGRUND owns and manages in excess of 18,000 residential units. Additionally, WESTGRUND secured the acquisition of further 2,700 apartments at the end of 2014. Following the takeover, the expanded ADLER Group will hold a total of almost 52,000 residential units in Germany.

Synergies are expected especially in the German states of Lower Saxony, North Rhine-Westphalia, Berlin, Brandenburg and Saxony, as the combined group will have a concentration of assets in these regions that allows for greater efficiency from an asset management perspective. Moreover, economies of scale are possible in financing, housing management, purchasing and portfolio management, as well as rental-related services, leading to general synergies. Tenants of both companies will benefit from cost advantages and improved support services. ADLER subsidiary ACCENTRO Real Estate AG, Berlin, Germany, Germany's largest company for residential real estate privatisation, will also be able to generate considerable earnings from the privatisation of WESTGRUND's residential units, especially in Berlin-Kreuzberg.

WESTGRUND investors will immediately receive considerable advantages from the merger thanks to the premium offer amounting to c. 20 percent regarding the last three month's average share price and the value of the new group, which is expected to have an EPRA NAV of approximately EUR 14.60 per share. Both investor groups benefit from the additional improvement of returns resulting from the future development of the combined, stronger and more stable company. Even without the privatisation business of ADLER subsidiary ACCENTRO AG, the FFO (funds from operations, cash flow from operating real estate business) are expected to amount to a range between EUR 67 million and EUR 70 million on an annualised basis, thereby evidencing the high earnings potential of both companies.

"We are very pleased with the opportunity of carrying out this acquisition for our shareholders, as it offers an excellent fit," Axel Harloff continues. "WESTGRUND owns an outstanding portfolio which is not adequately reflected in the share price." Following the takeover, the loan-to-value (LTV) will most likely be in the range of around 67 percent, and interest obligations on all liabilities (WACD) will decrease to 3.9 percent on average, meeting ADLER's 2016 year-end target 18 months in advance. The combined balance sheet total of both companies is expected to amount to around EUR 2.7 billion, and the market capitalisation of the new group will be over EUR 700 million. ADLER is expected to be included in the SDAX of the Frankfurt Stock Exchange and rank among the top tickers in this segment.

The transaction was advised by Oddo Seydler Bank AG.

For inquiries, please contact:

Press: german communications dbk ag
Jörg Bretschneider
Milchstr. 6 B, 20148 Hamburg, Germany
Phone: +49-(0)40/46 88 33 0, Fax: +49-(0)40/47 81 80

Investor Relations: Hillermann Consulting
Christian Hillermann
Poststraße 14, 20354 Hamburg, Germany
Phone: +49-(0)40/32 02 79 10, Fax: +49-(0)40/32 02 79 114

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