Conwert Immobilien Invest
Dr. Wolfgang Beck - Conwert Immobilien
Conwert CEO Wolfgang Beck commented, “Since I took office at conwert in late summer of last year during an intensive phase for the company, a lot has changed for the better."
The ongoing saga that is Germany's wave of consolidation among its listed residential property companies may reach its zenith later this month (at least temporarily) at a special shareholder meeting in Vienna of Austrian-listed Conwert Immobilien.
Germany's fifth-largest listed housing group Adler and its ally Petrus Advisors is seeking to replace three of four top managers at Conwert and add its own nominee, a move which is being rejected by Conwert and its second-largest shareholder Fidelity Insurance, which holds a 7.8% stake. Adler owns 22.4% of Conwert's stock, and Petrus 7.8%, but insists it is not looking to take over Conwert in a hostile bid. The special shareholder meeting is scheduled for March 17th, and Adler needs a quorum of 75% of the shareholder votes present at the meeting.
Adler owns about 50,000 apartments in Germany after a couple of years of rapid expansion through mergers and direct acquisitions. Conwert holds 29,700 apartments, most of which are in Germany. However, Conwert has a market capitalisation of about €1.2bn, against much less than half of that (€495m) for Adler Real Estate.
Adler's issue with Conwert is that it believes the Austrian company is not moving fast enough in disposing of non-core assets, particulary retail, and focusing on what should be its core business of German residential, which makes up 80% of its apartment holdings. It also wants to see Conwert cutting its cost base faster.
Conwert's management, Fidelity, and shareholder activist group ISS all plan to vote against the Adler move, and they accuse Adler of not providing a "compelling rationale" for change. Conwert has countered that its full-year 2015 earnings had surpassed its own guidance, and that it was pressing ahead with its cost-cutting and disposals programme in line with its own planned schedule.
It had offered Adler the addition of a fifth director to oversee Adler's legitimate interests, but Adler had rejected this. Conwert has made clear that it believes Adler plans an outright merger, or to force it to buy Adler's own housing assets.
Adler's proposed nominees to replace three of the existing directors are Dirk Hoffmann, the chairman of the supervisory board of Adler; Hermann Wagner, the supervisory board chairman of German listed DEMIRE Deutsche Mittelstand Real Estate, which has Swiss family office Wecken as a large minority shareholder in common with Adler; and Wijnand Donkers, the former chairman of German listed housing giant Deutsche Annington, now Vonovia, who is linked to Petrus Advisors.
Conwert claimed in a press release that, “With these proposals, Adler is clearly seeking to gain control of the administrative board and thus of conwert itself.” Defending its own board compilation, Conwert said:“Between them, the board members have a total of over 100 years of experience and expertise in board positions and in the management and restructuring of real estate companies.”
Conwert CEO Wolfgang Beck commented, “Since I took office at conwert in late summer of last year during an intensive phase for the company, a lot has changed for the better. The focus on residential property that we have pursued, and the sale of properties that are not part of our core business are progressing well. We have launched several programmes that will contribute to reducing our operating costs by 20%."
The company also defends its strong business results for 2015 which saw funds from operations (FFO) climbing by 50% last year, the 2016 FFO guidance lifted to €65m, while vacancies fell to 6.6% from 10% in 2014. The company's LTV ratio is 48%, compared to Adler's at 70%, offering more scope for future growth, it said. Its cost of debt at 2.3% is lower than Adler's at 4%, it also pointed out.
