Outcome of Corpus Sireo sale process expected in July
Things are hotting up in the sales process for one of Germany’s largest asset managers Corpus Sireo, which put itself on the block several months ago. A deadline of end-June for the submission of binding offers has now been laid down by the asset manager’s owners, which should flush out the serious contenders from the tyre-kickers in a two-part deal which could be valued at more than €600m.
In the first part, the owners of Corpus Sireo, which are the Sparkassen (savings banks) of Cologne-Bonn, Düsseldorf and Frankfurt, are aiming to raise €300m for Corpus Sireo’s €16.5bn pure asset management business, known as “Project Venus”. The division posted EBITDA figures in 2013 of €41m, with peer companies in these buoyant times trading on up to a multiple of 16 times expected annual earnings – much higher than would have been the case some years ago, thanks to stable incomes and a lower dependency on transactions.
The second part, known as “Project Merkur” involves the company’s proprietary real estate portfolio, and is likewise valued at €300m. The portfolio generates annual rental income of more than €20m, while housing portfolios of equivalent quality would normally expect to fetch a multiple of 15-16 times annual rent – with the market for quality residential portfolios in Germany still holding up very strongly.
Corpus Sireo handles real estate interests in Germany for clients including Deutsche Telekom, Deutsche Bank, and private equity groups Cerberus and Brookfield, and partners new institutional investors coming into Germany through either its Luxembourg investment management platform or through its international client management team in Frankfurt. It maintains 10 offices throughout Germany, with 560 staff.
The company has been frequently been ranked the “top asset manager in Germany” in the keenly-watched industry survey published annually by Cologne-based Bell Management Consultants, on which we generally report here in the pages of REFIRE. Traditionally, the Bell rankings include only those asset managers who do not work exclusively for their owners, but also manage assets for ‘genuine’ third parties.
Among those thought to be interested in bidding for the company (or one or the other parts of it) are property advisory groups JLL, CBRE and asset manager CR Investment Management, given the industry-wide trend for brokers and advisory groups to vertically integrate along the whole chain of value-added services.
Meanwhile, several German media sources suggest that a number of prospective bidders such as Bilfinger Real Estate, property manager Wisag and acquisitive Augsburg-based specialist fund manager Patrizia Immobilien have withdrawn. The reason cited for waning interest by these and other potential bidders is the perception of over-dependence on revenue associated with its largest client, Deutsche Telekom, which is scaring bidders off. Corpus was originally created as the property manager of Telekom, which subsequently took over Sireo Real Estate, which had been created at the same time. It still manages 14,000 Telekom properties across Germany, but it is unclear exactly what percentage of its overall turnover the Telekom mandate makes up.