German property group Ado Properties has exercised its call option to take control of Consus Real Estate, as part of a three-way merger which has also comprised the takeover of Adler Real Estate.
Together, the three companies are set to form Europe's fourth-largest listed residential player, with a strong focus on Germany.
Consus has a pipeline of more than 10,000 newly built apartments in the top seven German cities, which are expected to grow Ado's portfolio to around €14 bn on completion.
Consus, one of the country's largest residential property developers, signed an agreement with Ado last year alongside Adler, to create Germany's second-largest multifamily player after Deutsche Wohnen. The combined group will be rebranded Adler Real Estate by the summer.
Maximilian Rienecker, co-CEO of Ado said: 'The acquisition of Consus is an important milestone that reconfirms our position as one of the leading listed residential real estate platforms in Europe and in the German residential market.'
Thierry Beaudemoulin, co-CEO of Ado added: 'Its platform will provide us with greater control over the quality of our assets, facilitating future NAV accretion. This acquisition expands our presence in those markets in Germany where demand for housing is strongest.
'The combination of our three companies will thus be well-placed to address the current housing shortage to the benefit of tenants, investors and society at large.'
The deal is being executed in two stages: firstly via the call option with Aggregate Holdings, then with a share offer for Consus minority shareholders, representing 0.2390 Ado shares for each Consus share.
Upon settlement of the call option and Ado acquiring control, current Consus CEO Andreas Steyer and chief financial officer Benjamin Lee will surpervise a handover and then leave Consus.
Current Consus board spokesperson Jürgen Kutz and Theodorus Gorens, Consus chief risk officer and deputy CFO, will lead the newly established development arm of Ado going forward.
Ado co-CEOs Rienecker and Beaudemoulin intend to join the supervisory board of Consus.
Ado plans to launch a rights issue in the third quarter of this year, in connection with the acquisition of Adler, to the tune of €450 mln. After this, the new group is expected to have a loan to value of around 54%, with a target of 50% in the medium term.
As a result of the acquisition and the rights issue, Ado said it would more than double its weight in the FTSE EPRA Nareit Developed Europe index and is expected to become an MDAX candidate based on free-float market capitalisation.
The German federal government has recently estimated that some 375,000 of new dwellings need to be completed annually to resolve the country's housing shortage. Although the number of building permits granted increased by 4.5% to 110,600 in the first four months of 2020, current completions fall shy of these targets.
