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ADLER Real Estate AG: ADLER Real Estate AG with strategic participation in conwert Im-mobilien Invest SE

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

2015-08-17 / 15:48

Corporate News

ADLER Real Estate AG with strategic participation in conwert Immobilien Invest SE

- Acquisition of MountainPeak which holds 24.79 percent in conwert

- conwert focuses on top cities (A-locations) with considerable value growth potential

- The strategic participation is expected to be NAV accretive for Adler Real Estate

Hamburg, 17th August 2015. ADLER Real Estate AG ("ADLER", ISIN: DE0005008007 / WKN: 500800), Frankfurt/M., has taken an important strategic step to advance its future growth as a major residential real estate company in Germany. ADLER has acquired the entirety of the shares in MountainPeak Trading Limited, a holding company owned by the successful entrepreneur Teddy Sagi. MountainPeak holds 24.79 percent in conwert Immobilien Invest SE, Vienna, one of the leading real estate companies with participations in both residential and commercial property portfolios in Austria and in Germany. This move makes ADLER the single largest shareholder in conwert. "Our purchase is clearly a strategic participation, and in this context we do not want to exclude the possibility of further deepening our cooperation on our path to becoming a leading residential real estate company," says Axel Harloff, CEO of ADLER Real Estate AG.

According to conwert's 2015 first quarter report the company owns a property portfolio across Germany and Austria with a small percentage (c. 3%) outside these two countries with a total portfolio amounting to c.30.200 units and a current value of c. EUR 2.8bn. In Germany alone conwert holds a total property portfolio amounting to c. 25,150 residential and commercial units with a current value of c. EUR 1.77bn. The residential property portfolios in Germany are located in growth-strong metropolitan areas such as Berlin with more than 5,000 residential units representing an allocated value of c. EUR 400m (c.28%), Potsdam with c.1,670 units, with an allocated value of c. EUR 190m, (c.13%), Leipzig c.4,570; with an allocated value c. EUR 245m, (c.17%) Dresden c.580; with an allocated value of c. EUR 37m (c.3%) as well as in North Rhine-Westphalia with an allocated value of c. EUR 145m, (c.10%).

In Austria conwert owns a property portfolio of c. 4,220 units, with a current value of c. EUR 635m. c.77% of these assets are located in affluent areas in Vienna with an allocated value of c. EUR. 370m. conwert also plans to increase its focus on residential real estate to c. 80 percent of its portfolio by 2016. "We very much welcome these steps, since conwert's value on the stock market is well below its current NAV due to its hybrid structure e.g. its mix of residential and commercial properties," said Harloff.

Within three years, ADLER has grown to become an important residential real estate company with more than 50,000 residential units. ADLER's portfolios are predominantly located in Lower Saxony, North Rhine-Westphalia and Saxony.

Since 22 June 2015, ADLER's shares have been listed in the SDAX, the German share index for small caps. At the end of June 2015, ADLER also acquired the residential real estate company WESTGRUND AG, Berlin in line with its successful consolidation strategy. ADLER focuses on residential properties in Berlin and B-locations in strong economic regions. As a result, after deducting all costs the company's investments have generated positive cash flows for the group. Conwert has traditionally focussed on "A" locations and ADLER has focussed on "B" Locations and Berlin.

In ADLER's view there is still considerable upside potential in residential rents and future increases in residential property values allowing ADLER to capitalize on the growing performance of "A" locations whilst maintaining the strong yields generated in "B" Locations. This further enhances the strategic participation in conwert which has investments in "A" locations. On the basis of ADLER's experience and success with its subsidiary ACCENTRO, conwert will benefit from strengthening its privatisation opportunities.

The acquisition of MountainPeak has a total consideration of around EUR 285 million. This strategic participation is fully funded and ADLER will finance part of the purchase price by way of issuing a mandatory convertible bond in favour of the seller in an amount of EUR 175 million with a coupon of 0.5%, and a conversion price of EUR 16.50 per ADLER share over a three year term. This mandatory convertible bond duty will be added to the company capital and has a positive effect on the Loan to Value and the average interest load (WACD).

"ADLER has consistently outperformed both against its peers and indeed against their internal targets every year since 2012. The takeover of ACCENTRO and recently WESTGRUND together with the company's ability to manage special situation transactions has been impressive over the last two years and on this basis, I look forward to benefitting from the company's future successes and be supporting ADLER in future capital market transactions .The strategic investment in conwert can only strengthen both companies" said Teddy Sagi.

For inquiries please contact:

PRESSE: german communications dbk ag
Jörg Bretschneider
Milchstr. 6 B, 20148 Hamburg
Tel.: 040/46 88 33 0, Fax: 040/47 81 80

INVESTOR RELATIONS: Hillermann Consulting
Christian Hillermann
Poststraße 14, 20354 Hamburg
Tel.: 040/32 02 79 10, Fax: 040/32 02 79 114

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