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ADLER Real Estate AG: Reasons for a better future for conwert Immobilien Invest SE
DGAP-News: ADLER Real Estate AG / Key word(s): Miscellaneous
2016-03-07 / 09:51
The issuer is solely responsible for the content of this announcement.
Reasons for a better future for conwert Immobilien Invest SE
- ADLER not using Extraordinary General Meeting for hostile takeover or to gain control of conwert
- Focus remains on enhancing shareholder value
- conwert's performance could be improved with qualified Administrative Board
Hamburg, 7 March 2016. ADLER Real Estate AG, Frankfurt/M., (ISIN DE0005008007) is reacting to various publications by conwert Immobilien Invest SE, Vienna, also in order to counter various speculations that have been circulating in public in the past weeks.
Via its subsidiary, MountainPeak Trading Ltd., ADLER holds a 22.37 per cent stake in conwert, thus making it the single largest shareholder in the company. With its request to convene an extraordinary general meeting of shareholders and its proposals for changing the composition of conwert's Administrative Board, ADLER is not aiming to gain control over the company.
ADLER is instead concerned about the company's future and in particular about it making rapid and positive progress in line with a strategy that ADLER also endorses. This strategy essentially focuses the business on just one segment of the real estate market, namely residential property. conwert already owns around 30,000 apartments, most of which (about 80 per cent) in Germany, a market where ADLER also sees the greatest opportunities for conwert.
conwert is also pursuing the strategy of generating growth in Germany, rather than Austria. This is because Austria offers hardly any opportunities for generating growth by enlarging property portfolios or by investing in or acquiring larger-scale housing portfolios. This is also the case in and around Vienna. What's more, ADLER believes that property prices have already peaked, especially in Vienna.
ADLER invested in conwert in August last year because the company had substantial value reserves. These could be considerably increased if the aforementioned strategy were to be pursued systematically. Not only that, it was initially agreed with conwert's management that the two players could forge a strategic partnership, particularly by cooperating closely in the German residential property market, and thus exploit significant synergies for both companies.
ADLER acted early to request that a person of its choice should be a member of the Administrative Board. This person should also be Chairman of the Board in recognition of the fact that ADLER was the company's largest single shareholder. Here too, conwert's management was long in agreement with ADLER. The relevant position should have been vacated by Barry Gilbertsen. Mr. Gilbertsen had become Chairman of the Board last June upon the acquisition of a 25 percent stake in conwert by MountainPeak Trading Ltd., which was attributed at the time to the investor Teddy Sagi.
Regrettably, however, conwert's management no longer adhered to the original understanding. Moreover, it became apparent that conwert had failed to implement the strategy with the degree of consistency necessary to satisfy the expectations of ADLER and other shareholders.
ADLER is of the opinion that conwert's management has done too little, and even that far too sluggishly, for the company to be able to truly benefit from its opportunities, especially in the dynamic German property market. After all, this market has been characterised by very high demand for years now, a factor that is currently being intensified by the influx of refugees. Rents and property values are on the increase, while refinancing remains very affordable given ongoing low interest rates.
conwert has not acted quickly enough to reduce its proportion of commercial properties, which remains too high. It has also not seized the opportunities offered by the housing market in Vienna. By selling properties, conwert could have rapidly obtained high volumes of liquidity. These could have been used to acquire German residential properties that are still favourably priced. Furthermore, conwert was unable to obtain sufficient resources from other sources to finance its growth. conwert failed to place a bond, a factor which in the long term could also reduce conwert's prospects for obtaining fresh funds on the capital market. This in turn could endanger conwert's existing rating.
conwert's earning performance is also inconsistent with the original targets. In some cases, targets set were so low that reaching them is not exactly an achievement. conwert set itself the target of achieving cost savings of around 20 per cent. Based on available figures, however, the company's costs are so high compared with other residential real estate companies that double or treble that amount in savings would have been possible. According to conwert's figures, the German residential properties alone should be enough to generate FFO of EUR 55 million to EUR 60 million.
ADLER is convinced that conwert could realize its potential faster and more easily with suitable support from the Administrative Board - and that in the interests of all of the company's shareholders and of its shareholder value. ADLER has therefore proposed that three of the four individuals on conwert's Administrative Board should be replaced. It should be noted that ADLER only intends to propose one internal candidate for election to the Administrative Board. Dr. Dirk Hoffmann, Chairman of ADLER's Supervisory Board and Deputy Chairman of the Supervisory Board of ADLER's subsidiary Accentro Real Estate AG should - as the future Chairman of conwert's Administrative Board - suitably represent ADLER's interests. Dr. Hoffmann has long served as a Management Board member at four major mortgage banks in Germany. Given his longstanding activity as a Supervisory Board member at German and international real estate companies, he can contributed profound experience of the German property market.
The other two candidates put forward by ADLER for election to the Administrative Board, namely Prof. Wagner and Mr. Donkers, are both independent of ADLER. These candidates are favoured by ADLER because they have incomparably more expertise, particularly in the German property market, than the three members of conwert's Administrative Board proposed to be voted out.
ADLER underlines that these proposals in no way constitute "hostile actions". Such actions are not intended and would in any case make little sense given that - unlike in the assertion made by conwert - it is conwert's Management Board that manages conwert's business. According to § 11 of conwert's company statutes, the Management Board must consider all interests, those of its employees, those of its shareholders and those of the common good (public interest). To meet this requirement, the Management Board must ensure that no transactions are entered into between the company and its direct or indirect subsidiaries and participating interests or with company shareholders that do not serve the company's best interests.
Compared with the sector as a whole, conwert has been underperforming for years. This is particularly apparent in the company's share price, which only rose significantly after ADLER acquired its interest. As the single largest shareholder, ADLER is exercising its right to protect its own interests. These consist in ensuring conwert's development along value-oriented lines, a factor that will ultimately support the company's share price. This is therefore in the interests of all conwert shareholders.
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ADLER Real Estate AG: ADLER Real Estate AG, headquartered in Frankfurt and with its administrative headquarters in Hamburg, focuses on the acquisition, management and administration of residential property privatisation. ADLER invests primarily in portfolios with residential real estate companies in B-locations of major conurbations with units that achieve a positive cash flow and can demonstrate a sustained appreciation potential.
The ADLER subsidiary, ACCENTRO Real Estate AG, is one of the largest privatisers of residential property in Germany. ACCENTRO markets suitably targeted residential property from the holdings of the ADLER Group and procures condominiums for third party owner-occupiers and investors seeking to provide for their retirement.
Following the acquisition of Westgrund AG, Berlin at the end of June 2015 and with nearly 50,000 residential units, ADLER is among the top five largest German residential property companies listed in Germany. In addition to the listing on the FTSE EPRA / NAREIT Global Real Estate Index in London and the GRP General Index, shares in ADLER are also listed in the small cap index SDAX of the Deutschen Börse.
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|Company:||ADLER Real Estate AG|
|60528 Frankfurt am Main|
|Phone:||+49 (0)40 - 29 8130-0|
|Fax:||+49 (0)40 - 29 8130-99|
|ISIN:||DE0005008007, XS1211417362, DE000A1R1A42, DE000A11QF02|
|WKN:||500800, A14J3Z, A1R1A4, A11QF0|
|Indices:||SDAX, GPR General Index|
|Listed:||Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg|
|End of News||DGAP News Service|