News
07/03/2007
Deutsche Wohnen AG: Agreement to merge with GEHAG Group
DGAP-Ad-hoc: Deutsche Wohnen AG: Agreement to merge with GEHAG Group
Deutsche Wohnen AG / Acquisition
Release of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
On 2 July 2007 Deutsche Wohnen AG reached an agreement with OCM Luxembourg Real Estate Investments S.à.R.l. and OCM Luxembourg Opportunities Investments S.à.R.l. and concluded a notarised contract regarding the merger of Deutsche Wohnen Group with GEHAG Group (Berlin). Both selling parties mentioned above are backed by the private equity company Oaktree Capital Management LLC, Los Angeles, USA.
In the course of the merger, Deutsche Wohnen Group indirectly takes over 85 percent interest in GEHAG GmbH. Deutsche Wohnen AG also intends to take over the remaining shares from HSH Real Estate AG, representing about 15 percent. The Federal State of Berlin owns a share of considerable less than 1 percent in GEHAG GmbH.
GEHAG Group owns approximately 27,000 residential units in Berlin and Brandenburg. As a result of the merger with GEHAG Group, Deutsche Wohnen AG’s residential portfolio will expand from a current number of approximately 23,000 own residential units to approximately 50,000 residential units in total. GEHAG Group also owns 20 senior citizens’ and care homes as well as an independent media and cable business.
The merger is based on an enterprise value relating to 100 percent of the entire GEHAG Group in the amount of approximately EUR 1.84 billion. OCM Luxembourg Real Estate Investments S.à.R.l. and OCM Luxembourg Opportunities Investments S.à.R.l. will receive 6.4 million new bearer shares in Deutsche Wohnen AG as well as a convertible bond with an overall nominal value of EUR 25 million. The sellers may exercise their conversion right until 2010, at a price of EUR 45.00. In addition OCM Luxembourg Real Estate Investments S.à.R.l. and OCM Luxembourg Opportunities Investments S.à.R.l. will receive a cash purchase price of EUR 257 million. Financial liabilities of GEHAG Group (inclusive GEHAG Acquisition Co. GmbH) currently amount to approximately EUR 1.31 billion.
Together, with 6.4 million new bearer shares in Deutsche Wohnen AG OCM Luxembourg Real Estate Investments S.à.R.l. and OCM Luxembourg Opportunities Investments S.à.R.l. will hold approximately 25 percent of the shares in Deutsche Wohnen AG, not including the rights associated with the convertible bond. In the context of the transaction, the sellers have agreed to observe a lock-up period of at least twelve months for the shares and the convertible bond.
The effectiveness of the agreement is still subject to several conditions, inter alia the approval of the German Federal Cartel Office.
Based on the intended change in accounting investment properties from 'cost model' to 'fair value model' and due to transaction, restructuring and interest expenses coming from the merger with GEHAG Group, the current forecast for 2007 profit after tax of new formed Deutsche Wohnen/GEHAG Group of EUR 15 million will be reduced to EUR 1 million.
Information and Explaination of the Issuer to this News:
As a result of this transaction, Deutsche Wohnen AG will reposition itself and expand its business model that until now was focused on privatisations by including active real estate asset management as a starting point for the intended strategic growth as communicated throughout the past months. Deutsche Wohnen AG will thus lastingly expand its position in the German housing market as the second largest German listed residential property company. Based on the total purchase price, the average purchase price for the GEHAG residential property stock comes to approximately EUR 1,000 per sqm. Sal. Oppenheim has given an investmentbank opinion to the Supervisory Board of Deutsche Wohnen and has confirmed the adequacy of the purchase price based on the information received.
Mr. Andreas Lehner, Chief Executive Officer of Deutsche Wohnen AG, on the future acquisition policy: 'This merger establishes a consolidation platform with significant potential for synergies, and therefore for strategic growth. In view of the positive economic development in Germany and the resulting improvement in the market potential in the housing market, this merger will form the starting point for further expansion of our portfolio, in particular in growth regions; at the same time, we will also continue to carry out the profitable, smaller additions to the portfolio as we have during the past months. After the merger, Deutsche Wohnen AG will represent a partnership-oriented platform for potential sellers of residential portfolios such as large public- and private-sector portfolio managers, and will be an ideal partner for consolidation due to its reputation and its experience in the capital market.'
GEHAG Group is a Berlin-based company with a long-standing tradition in the residential property market. It was already privatised in 1998 – just like the housing companies in Rhineland-Palatinate and Hesse that were amalgamated under the umbrella of Deutsche Wohnen. Today, in addition to managing the residential portfolio in Berlin and the surrounding region in Brandenburg, GEHAG Group also manages 20 senior citizen’s and care homes throughout Germany with approximately 2,100 places, and approximately 74,000 apartments and houses in Germany are supplied with media such as internet and telephone services and cable TV. Due to the good condition of the apartments in Berlin’s residential districts built in the 30s, the housing stock can be described as a jewel in Berlin's housing market. Since Oaktree’s involvement in 2005, GEHAG Group underwent a successful, fundamental restructuring and repositioning process.
The Management Board of Deutsche Wohnen AG has identified a significant potential for appreciation with respect to the acquired housing stock in Berlin in view of the potential for catch-up and development of the entire Berlin housing market. Also, essential administrative resources will be focused. Mr. Andreas Lehner: 'We have prepared an administrative efficiency programme for the expanded Deutsche Wohnen Group which over the coming two to three years will give the merged Deutsche Wohnen / GEHAG Group a more competitive management and service cost structure'.
The inclusion of the GEHAG Group will exert a positive effect on Deutsche Wohnen AG’s EBITDA and FFO yield. Deutsche Wohnen’s current NAV of approximately EUR 36 per share will increase substantially throughout the next years, ceteris paribus. In two to three years at the latest, the annual results are intended to permit payment of dividends without negatively affecting company’s substance.
The Management Board of Deutsche Wohnen AG will explain the acquisition of GEHAG Group in two English-language telephone conferences on 3 July 2007, at 11:00 a.m. as well as at 4:00 p.m. (in each case Central European Time). Both telephone conferences will also be transmitted (livestream) on our website at http://www.deutsche-wohnen.de.
Hubert Bonn
Head of Investor & Public Relations
Phone: +49 (0)6131 6397 116
email: ir@deuwo.com
DGAP 03.07.2007
Language: English
Issuer: Deutsche Wohnen AG
Pfaffenwiese 300
65929 Frankfurt am Main Deutschland
Phone: +49 (0)6131-6397-116
Fax: +49 (0)6131-6397-199
E-mail: hubert.bonn@deuwo.com
Internet: www.deutsche-wohnen.de
ISIN: DE000A0HN5C6, DE0006283302
WKN: A0HN5C, 628330
Indices: SDAX
Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin-Bremen, Hamburg, Düsseldorf, München, Stuttgart
End of News DGAP News-Service
Deutsche Wohnen AG / Acquisition
Release of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
On 2 July 2007 Deutsche Wohnen AG reached an agreement with OCM Luxembourg Real Estate Investments S.à.R.l. and OCM Luxembourg Opportunities Investments S.à.R.l. and concluded a notarised contract regarding the merger of Deutsche Wohnen Group with GEHAG Group (Berlin). Both selling parties mentioned above are backed by the private equity company Oaktree Capital Management LLC, Los Angeles, USA.
In the course of the merger, Deutsche Wohnen Group indirectly takes over 85 percent interest in GEHAG GmbH. Deutsche Wohnen AG also intends to take over the remaining shares from HSH Real Estate AG, representing about 15 percent. The Federal State of Berlin owns a share of considerable less than 1 percent in GEHAG GmbH.
GEHAG Group owns approximately 27,000 residential units in Berlin and Brandenburg. As a result of the merger with GEHAG Group, Deutsche Wohnen AG’s residential portfolio will expand from a current number of approximately 23,000 own residential units to approximately 50,000 residential units in total. GEHAG Group also owns 20 senior citizens’ and care homes as well as an independent media and cable business.
The merger is based on an enterprise value relating to 100 percent of the entire GEHAG Group in the amount of approximately EUR 1.84 billion. OCM Luxembourg Real Estate Investments S.à.R.l. and OCM Luxembourg Opportunities Investments S.à.R.l. will receive 6.4 million new bearer shares in Deutsche Wohnen AG as well as a convertible bond with an overall nominal value of EUR 25 million. The sellers may exercise their conversion right until 2010, at a price of EUR 45.00. In addition OCM Luxembourg Real Estate Investments S.à.R.l. and OCM Luxembourg Opportunities Investments S.à.R.l. will receive a cash purchase price of EUR 257 million. Financial liabilities of GEHAG Group (inclusive GEHAG Acquisition Co. GmbH) currently amount to approximately EUR 1.31 billion.
Together, with 6.4 million new bearer shares in Deutsche Wohnen AG OCM Luxembourg Real Estate Investments S.à.R.l. and OCM Luxembourg Opportunities Investments S.à.R.l. will hold approximately 25 percent of the shares in Deutsche Wohnen AG, not including the rights associated with the convertible bond. In the context of the transaction, the sellers have agreed to observe a lock-up period of at least twelve months for the shares and the convertible bond.
The effectiveness of the agreement is still subject to several conditions, inter alia the approval of the German Federal Cartel Office.
Based on the intended change in accounting investment properties from 'cost model' to 'fair value model' and due to transaction, restructuring and interest expenses coming from the merger with GEHAG Group, the current forecast for 2007 profit after tax of new formed Deutsche Wohnen/GEHAG Group of EUR 15 million will be reduced to EUR 1 million.
Information and Explaination of the Issuer to this News:
As a result of this transaction, Deutsche Wohnen AG will reposition itself and expand its business model that until now was focused on privatisations by including active real estate asset management as a starting point for the intended strategic growth as communicated throughout the past months. Deutsche Wohnen AG will thus lastingly expand its position in the German housing market as the second largest German listed residential property company. Based on the total purchase price, the average purchase price for the GEHAG residential property stock comes to approximately EUR 1,000 per sqm. Sal. Oppenheim has given an investmentbank opinion to the Supervisory Board of Deutsche Wohnen and has confirmed the adequacy of the purchase price based on the information received.
Mr. Andreas Lehner, Chief Executive Officer of Deutsche Wohnen AG, on the future acquisition policy: 'This merger establishes a consolidation platform with significant potential for synergies, and therefore for strategic growth. In view of the positive economic development in Germany and the resulting improvement in the market potential in the housing market, this merger will form the starting point for further expansion of our portfolio, in particular in growth regions; at the same time, we will also continue to carry out the profitable, smaller additions to the portfolio as we have during the past months. After the merger, Deutsche Wohnen AG will represent a partnership-oriented platform for potential sellers of residential portfolios such as large public- and private-sector portfolio managers, and will be an ideal partner for consolidation due to its reputation and its experience in the capital market.'
GEHAG Group is a Berlin-based company with a long-standing tradition in the residential property market. It was already privatised in 1998 – just like the housing companies in Rhineland-Palatinate and Hesse that were amalgamated under the umbrella of Deutsche Wohnen. Today, in addition to managing the residential portfolio in Berlin and the surrounding region in Brandenburg, GEHAG Group also manages 20 senior citizen’s and care homes throughout Germany with approximately 2,100 places, and approximately 74,000 apartments and houses in Germany are supplied with media such as internet and telephone services and cable TV. Due to the good condition of the apartments in Berlin’s residential districts built in the 30s, the housing stock can be described as a jewel in Berlin's housing market. Since Oaktree’s involvement in 2005, GEHAG Group underwent a successful, fundamental restructuring and repositioning process.
The Management Board of Deutsche Wohnen AG has identified a significant potential for appreciation with respect to the acquired housing stock in Berlin in view of the potential for catch-up and development of the entire Berlin housing market. Also, essential administrative resources will be focused. Mr. Andreas Lehner: 'We have prepared an administrative efficiency programme for the expanded Deutsche Wohnen Group which over the coming two to three years will give the merged Deutsche Wohnen / GEHAG Group a more competitive management and service cost structure'.
The inclusion of the GEHAG Group will exert a positive effect on Deutsche Wohnen AG’s EBITDA and FFO yield. Deutsche Wohnen’s current NAV of approximately EUR 36 per share will increase substantially throughout the next years, ceteris paribus. In two to three years at the latest, the annual results are intended to permit payment of dividends without negatively affecting company’s substance.
The Management Board of Deutsche Wohnen AG will explain the acquisition of GEHAG Group in two English-language telephone conferences on 3 July 2007, at 11:00 a.m. as well as at 4:00 p.m. (in each case Central European Time). Both telephone conferences will also be transmitted (livestream) on our website at http://www.deutsche-wohnen.de.
Hubert Bonn
Head of Investor & Public Relations
Phone: +49 (0)6131 6397 116
email: ir@deuwo.com
DGAP 03.07.2007
Language: English
Issuer: Deutsche Wohnen AG
Pfaffenwiese 300
65929 Frankfurt am Main Deutschland
Phone: +49 (0)6131-6397-116
Fax: +49 (0)6131-6397-199
E-mail: hubert.bonn@deuwo.com
Internet: www.deutsche-wohnen.de
ISIN: DE000A0HN5C6, DE0006283302
WKN: A0HN5C, 628330
Indices: SDAX
Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin-Bremen, Hamburg, Düsseldorf, München, Stuttgart
End of News DGAP News-Service