German property group Ado Properties has announced plans to carry out a rights issue of €450 mln to finance the takeover of its development arm Consus and pay down debt owed by the firm.

Consus site

Consus Site

The capital hike – which is fully underwritten by syndicate banks J.P. Morgan, Deutsche Bank Aktiengesellschaft, Barclays Bank and Kempen & Co – comprises roughly 31 million new shares which will be offered to Ado’s existing shareholders at the subscription price of €14.60 per new share.

Existing shareholders may acquire 5 new shares for 12 existing shares of Ado. They have all committed to participate in the Capital Increase according to their shareholding. In any case the banking syndicate has agreed to procure subscribers for any shares that may remain unsubscribed, Ado said.

The subscription period commences on 6 July 2020 and ends on 20 July 2020.

The operation follows an announcement by Ado last week that it would exercise 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.

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.

After the rights issue, the new group is expected to have a loan to value of around 54%, with a target of 50% in the medium term.