US asset management group Ares is set to invest €140 mln to become the new anchor shareholder of Peach Property, a Zurich-based residential property investor focused on German property assets.
As part of the agreement, Ares will acquire the stake as part of Peach Property’s planned CHF 200 mln (€185 mln) capital increase. It will subscribe to CHF 150 mln of the issue, receiving an interest of around 30% in the company and becoming the largest single shareholder in the company.
The issue will be in the form of convertible bonds with a coupon of 2.5% per annum which will obligatorily convert into equity at a conversion price of CHF 42.50 per share no later than 30 June 2021.
In a statement, Peach said that it will use the new funds to finance last week’s acquisition of 4,800 residential units in Germany; increasing in the portfolio by nearly a third to more than 23,000 units with a value of CHF 2 bn.
Closing of the transaction is expected to take place at the end of 2020. The parties agreed not to disclose the seller and the purchase price.
The portfolio, providing 295,000 m2 of space, has a vacancy rate of 10.8% and generates actual rental income of around CHF 19.9 mln. Around 2,100 apartments or 44% of the newly acquired residential units are located in the economically strong triangle between Wolfsburg, Braunschweig as well as Magdeburg. Another 35% are in North Rhine-Westphalia.
‘In the course of the current year we have already acquired more than 10,000 apartments in Germany and hence underpinned our relevance as a player on this market,’ said Thomas Wolfensberger, CEO of Peach Property Group . ‘We are very pleased to welcome Ares as our new anchor shareholder with its extensive investment experience in the German residential market. Alongside our recently announced acquisitions, the capital increase will enable continued growth and efficiencies to drive value for our shareholders.’
‘Peach Property offers a unique opportunity to invest in one of the more defensive asset classes in Europe today whilst also benefitting from what we believe is an attractive growth trajectory for the company,’ said John Ruane, partner and co-head of Ares European Real Estate Equity. ‘With over 20,000 residential units, Peach Property’s customer orientated business model and digital platform makes it a stand-out player in the German residential market. We look forward to working with the management team to support further growth over the coming years.’
Following the operation, Klaus Schmitz, managing director at Ares specialising in equity investments in the European real estate sector, is to be elected as a new member of the Board of Directors of the Peach Property Group.
