Boardroom struggle at TLG Immobilien as Ouram seeks changes
In our December issue of REFIRE, we speculated that Ouram Holding, controlled by Israeli investor Amir Dayan, was about to make a full takeover attempt for the German listed TLG Immobilien. The power struggle at board level has escalated dramatically since then, with supervisory board chairman Michael Zahn warning shareholders that Dayan may well be about to gain full control of the company without making a full takeover offer.
Ouram took the step last week of calling for an extraordinary shareholder meeting to push through major changes in the composition of the supervisory board.
In an official announcement, TLG Immobilien said the management board has received a request submitted by Ouram Holding to convene an extraordinary shareholders' meeting in which it will request the revocation of current members Michael Zahn – also CEO of Deutsche Wohnen - Michael Bütter - until recently CEO of Corestate Capital - and Helmut Ullrich. Members Sascha Hettrich and Stefan E. Kowsk, who were appointed to the board after Ouram became a major shareholder, are to stay. (Zahn has already made clear his intention not to remain on after his contract expires in May.)
Ouram will propose the election of Beatrice Ruskol, Amir Ramot, Klaus Krägel and Jon Lurie as new members. Ruskol is a former executive of PBM Construction Germany, part of Dayan’s Intown Group, Ramot had posts with the Israeli Aurec Real Estate, while Jonathan Lurie is a former senior executive of Blackstone.
The management board said it intends to meet the request for the extraordinary shareholder meeting, which is expected to be held in March.
Last month listed commercial property investor DIC Asset AG sold its 14% stake to Ouram Holding and wealth manager Bedrock Group for €376m. The net effect was that Ouram got 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.
Ouram held 22.47% of TLG through most of 2018 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 hinted last year it might want to take a controlling interest in TLG, which is currently capitalized at about €2.7bn.
Before the year-end 2018, 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 now about €26.40, having risen steadily from €21.30 in early-November 2018.
TLG Immobilien also experienced considerable operational changes last year, with the dismissal in summer of its two long-time chief executives Peter Finkbeiner and Niclas Karoff, reportedly over strategy differences with the supervisory board. TLG brought in former DIC Asset executive Jürgen Overath and ex-Vonovia board member Gerald Klinck to replace the two TLG directors.