Conwert buys majority stake in German resi firm KWG

Austrian listed property investor Conwert Immobilien has purchased a stake of around 60% in Hamburg-based residential company Kommunale Wohnen AG (KWG), which manages some 9,700 units in Germany.

The parties agreed not to disclose the purchase price. However, the stake was acquired at an implied purchase price of EUR 620 per m². Based on KWG’s assets under management of 605,000 m2, this translates into a total purchase price of EUR 375 mln.

The acquisition expands Conwert’s portfolio in Germany by roughly 66% to nearly 24,500 units. The KWG portfolio is predominantly focused on North Rhine-Westphalia, Berlin, Saxony, Lower Saxony and Thuringia. KWG expects rental income for 2013 to amount to EUR 32 mln, following an anticipated EUR 19.5 mln for 2012.

The transaction is expected to close at end-January 2013 following approval by the cartel authorities.

Stavros Efremidis, management board spokesman at KWG, will be appointed to the executive board of Conwert following the completion of the transaction. He will be responsible for the operating business in the core market Germany.

Commenting on the deal, he said: ‘Conwert is the optimal buyer for KWG...We see great value added potential in the management, know-how transfer and synergies arising from the combination of the two administration platforms.’

The transaction will be financed in roughly equal parts of cash and treasury shares (EUR 13.94 per share implied transaction value of treasury shares) of Conwert.

Part of the purchase price is dependent on KWG achieving certain key figures. The vendor has the right to acquire another 1 million Conwert shares at a price of EUR 10.00 per share within three years of the conclusion of the transaction. Conwert will initiate another share buyback programme in the near future in order to be able to cover this option in the event it is exercised in the next three years.