As DIC Asset exits TLG, is Ouram preparing takeover bid?

In a transaction worth €376m, Frankfurt-based DIC Asset has signed a sales agreement to sell its entire 14% stake in Berlin listed peer TLG Immobilien to Ouram Holding and wealth manager Bedrock Group.

Commercial property investor DIC Asset, listed in the Prime Standard on the Frankfurt Stock Exchange, said the share disposal was done, “for a purchase price which is higher than the current stock exchange price” (actually, 6% higher). The total purchase price is €376m, and DIC Asset said the resulting substantial profit goes directly into its balance sheet and profit and loss account.

In effect, Ouram is now taking a further 6% stake in TLG Immobilien, while newcomer Bedrock is getting 8%, although Ouram said in a statement that there is no connection between its holding in TLG and that of Bedrock.The move is likely to lead to renewed speculation about a takeover attempt of TLG Immobilien by Ouram.

Ouram, controlled by Israeli investor Amir Dayan, held 22.47% of TLG through most of this year after converting financial instruments to voting stock. The company's new holding therefore rises to 28.47%, keeping it below the 30% threshold for requiring a full takeover bid for TLG. Ouram had earlier this year hinted it might want to take a controlling interest in TLG, which is currently capitalized at about €2.5bn.

Earlier this month TLG Immobilien revalued its portfolio by up to 11% since July, not counting new additions and sales since then. In an ad hoc statement, it said that its portfolio would appreciate by year-end by between €370m and €400m as a result of higher valuations, supported by advisers Savills and Cushman & Wakefield, largely driven by yield compression and higher market rents, particularly for its Berlin assets, and from current re-letting contracts.

This should boost its portfolio value from €3.7bn to €4bn, corresponding to an increase in NAV of more than €3.00 to up to €26.10 per share. The current share price is about €25.80.

DIC Asset acquired the TLG stake last year in return for selling its controlling holding in smaller listed office peer WCM. Surprisingly, just before the sale of its stake to Ouram and Bedrock, DIC had actually just further boosted its holdings in TLG, from just under 12%. Closing of the transactions is expected to take place at the end of the first quarter/beginning of second quarter 2019 at the latest, a DIC Asset release said. The proceeds will be used to grow its own business.

Bedrock, so far inconspicuous in European real estate, is an independent investment boutique founded in 2004. It maintains offices in London, Geneva, Zurich and Monaco and has a team of 100 investment professionals overseeing over $10bn of client assets. Bedrock says its clients are high net worth families, investment professionals, endowments, foundations and institutions.