Adler stabilises business by selling Accentro to UK's Vestigo
Listed German residential investor Adler Real Estate has sold its likewise-listed residential privatisation subsidiary Accentro Real Estate to a fund managed by Vestigo Capital Advisers, for a price of about €180m.
The deal represents a juicy return for Adler Real Estate which bought Accentro three years ago for €108m. The company was then called Estavis AG, and was trading unprofitably at the time.
The current takeover involves Vestigo buying 82% of Accentro – made up of buying 80% of the outstanding shares and 92% of Accentro's convertible bonds due 2014/2019. This corresponds to €7.33 per Accentro share (the current share price is €8.00
The agreement calls for an initial payment on signing of the contract, followed by further partial payments including interest over the next 13 months. Adler will also have the option of selling up to a further 6% of Accentro for the same price. However, the purchase of such a large stake may well lead to a mandatory takeover offer for all shares, as is frequently required by the German Securities Acquisition and Takover Law.
UK company Vestigo Capital Advisors LLP has assets under management of about US$250m. The company's focus is on real estate, energy, infrastructure and hospitality.
According to Arndt Krienen, CEO of Adler Real Estate, "We have taken a decisive step towards simplifying and concentrating on our core business model. We will no longer be conducting trading activities, but will instead concentrate on our core business of lettings, i.e. on providing tenants with a supply of housing, primarily in the affordable segment, that is in line with the market and attractive in terms of quality."
In other words, the volatile business of upgrading and privatising apartments is no longer part of Adler's activities, which will become a more traditional 'buy and hold' investor. The company will use the sale proceeds to further grow its real estate portfolio or to redeem existing liabilities in line with its strategy to improve its capital structure.
"As the sale will also strengthen the equity base of Adler Real Estate by around €45m and will thus support our financial policy, in particular to reduce LTV to below 55 % and targeting to obtain an investment grade rating. This in turn will significantly improve the conditions for our future financing," said Krienen. Adler's LTV ratio is about 60%, high in comparison to its peers (Vonovia AG has an LTV ratio of 43%, for example).
Accentro recently sold 259 apartments in 8 buildings in its heartland of Berlin for nearly €44m to a family office, at the same time buying a further 240 units in Berlin and Hannover for €35.3m. The company recently re-iterated its full-year EBIT forecast of €34-€36m.