Aroundtown raises fresh €600m, buys Blackstone Center Parcs for €1bn

Germany’s largest listed commercial real estate company Aroundtown SA is buying seven Center Parcs Europe holiday parks from Blackstone for about €1bn, in a deal that looks like it was brokered by Eastdil Secured.

The seven properties are operated by Pierre et Vacances SA, which owns and operates a number of Center Parcs properties in continental Europe. The seven properties are all branded as Center Parcs Europe, and are located in Belgium, Germany and the Netherlands. They were sold by Pierre et Vacances to Blackstone for about €630m in 2006, so the deal represents a handsome profit for Blackstone.

For Aroundtown, the deal reflects an acquisition-multiple of 16 and has an upside potential for an unlevered long term yield to 7%.

The UK parks - and now Irish, since the opening of a park this week – are all part of a separate company, Brookfield Asset Management, which bought the business from Blackstone in 2015 for 2.4 billion pounds.

The acquisitive Aroundtown said in a trading statement earlier this month that it had a pipeline of hotel and office acquisitions totaling about €1.5bn, of which the Center Parks deal would account for about €1bn and likely to be signed in the third quarter, it said.

"Aroundtown's acquisition activities strongly support the quality of the portfolio and fit to the company's value-creation strategy with a focus on the office and hotel segments, mainly in Germany and the Netherlands," the firm stated in the report.

During the month, the MDAX-listed Aroundtown said that it had increased the size of its capital increase of new shares to €600m from its originally-planned €500m, with the proceeds raised being used to fund the company’s growth strategy. 

It issued 84 million new shares at €7.15 each to institutional investors in an accelerated book-building process. The company, and its subsidiary Grand City Properties, have been tapping the capital markets frequently for new equity to fund their rapid expansion.

Earlier in the month Aroundtown placed €1.4bn of fixed rate senior notes under its EMTN Programme, in two tranches. The first tranche of €800m has a coupon of 0.625% and a maturity date in 2025, and was placed at an issue price of 98.039% of the relevant principal amount of the notes. The second tranche of €600m has a coupon of 1.45% and a maturity date in 2028, and was placed at 98.422%. The book was several times oversubscribed. 

The notes will be traded on the Irish Stock Exchange, now known as Euronext Dublin. The proceeds will be used for re-financing and paying down existing debt, including paying down €600m of 1.5% notes due for redemption in 2022 and 2.125% notes due in 2023.

The Luxembourg-registered Aroundtown is the largest and currently highest-rated German commercial real estate company, having listed in 2015. At its current share price of about €7.64, it is paying a dividend of 3.27%.