Lone Star to buy Munich developer ISARIA for €106m

US private-equity firm Lone Star has launched a public tender offer for all outstanding shares of the Munich-based residential developer ISARIA Wohnbau. Isaria's management has welcomed the offer, saying that a partnership with Lone Star would be good for its further growth.

A vehicle linked to the Lone Star Real Estate Fund IV, LSREF4 ARIA Beteiligungs GmbH & Co, is offering €4.50 per share of Isaria, which values the company at €106m. This is a premium of 23% above the company's closing share price of €3.66 last week. Isaria said that Lone Star has already signed a series of bilateral contracts to ensure that it would gain a majority shareholding over several steps.

Lone Star has also committed to underwriting a possible future capital increase of up to 50%, or €53m, of the current share capital at €4.50 apiece. Proceeds would be used to acquire new projects and speed up existing ones. Assuming a successful takeover Isaria would then be delisted from the stock market. Isaria Wohnbau is one of the top 3 project developers in Munich, having built more than 2,500 housing units in the Bavarian capital. It recently established a foothold in the Hamburg market. Revenues are just under €100m, with net income for the year projected in the mid-single digit million range.

Isaria's largest shareholder is Helvetic Private Investments with a 10% holding, followed by Hamburg-based Captree (8.8%), family office aeris Capital (7.8%), Detroit-based investment manager Janus Capital Management (3.9%), Thomas Ermel (3.8%) and US investment manager Fidelity Investments (2.9%). Almost 63% of the shares are in free float.

Lone Star has been active in Germany for more than 15 years, when it started as a counter-cyclical buyer of unfashionable buyer of 'plattenbau' residential housing. The parent company in Dallas set up its first fund in 1995, and since then has launched 16 private equity funds with aggregate capital commitments of more than €65bn.