Aareal takes over Corealcredit for €342m

German lender Aareal is to take control of peer Corealcredit Bank for around €342 mln in a deal which includes Corealcredit's offices, functions and staff.

The €342 mln price tag reflects a discount to the book value of Corealcredit's assets and liabilities.

Aareal is buying the property financier from its present shareholder, LSF5 German Investments, an investment fund of US private equity group Lone Star. The transaction, which still needs to be approved by government agencies, is to be closed by no later than mid-2014.

The acquisition will be financed entirely from Aareal's own resources and will be earnings-per-share-accretive from the first year onwards. Aareal Bank said it will continue to fully comply with the tightened capital requirements under Basel III after the transaction has been completed.

'Following its successful restructuring and repositioning, we welcome the fact that Corealcredit is now receiving a strong strategic investor in the guise of Aareal Bank Group, which is well established in the commercial real estate financing sector. The management will be actively involved in the transition,' commented Claus Nolting, chairman of Corealcredit's management board.

With a staff of 175, Corealcredit has offices in Berlin, Hamburg, Düsseldorf, Stuttgart and Munich. The lender boasts a balance sheet total of €7.6 bn and a commercial property financing volume of €3.6 bn.

Lone Star acquired a majority stake in the ailing Corealcredit, then known as Allgemeine Hypothekenbank Rheinboden, in December 2005. It took full control of the bank two years later and has since restructured the business which returned to the black that same year.

'By acquiring the newly realigned Corealcredit Bank, we are exploiting an attractive opportunity for inorganic growth at a favourable time,' explained Aareal's CEO Wolf Schumacher. 'With this step, we are further expanding our position as one of the leading providers of commercial property financing.'