New M&A wave gathers together €127b of European real estate

The largest M&A operation involves listed UK investment managers Standard Life Investments (SLI) and Aberdeen Asset Management. 

The merger, scheduled to complete on 14 August, will create Standard Life Aberdeen, the second largest fund manager in Europe with £660 bn (€738 bn) under management across a range of asset classes.

The combined real estate business will have more than €43 bn of assets in Europe, based on the €21.3 bn held by Aberdeen AM at end-2016 and SLI's European property portfolio of €22.1 bn.

In excess of €80 bn of real estate assets is at play across nine mergers in Europe's listed real estate sector, according to a scan by PropertyEU Research. 

Blackstone completed its buy-out of the minority shareholders of Finnish landlord Sponda in July after launching its friendly bid a month earlier. Helsinki-listed Sponda focuses on retail and office properties in Finland and its portfolio was valued at around €3.8 bn in March this year. The deal included €2 bn of Sponda's debt, plus €1.8 bn in equity.

France
This week French REIT Icade confirmed it had reached an agreement to take over its smaller peer ANF Immobilier before the end of the year. The share acquisition hinges on ANF selling assets in Marseilles to Primonial REIM for €400 mln. A sale of this 'legacy portfolio' would leave ANF €600 mln of assets to add to Icade's €9.9 bn.

The planned acquisition of ANF is the latest in a number M&A moves completed or announced in the French real estate sector this year.

The largest involves French REIT Gecina taking over peer Eurosic, anticipated before the end of the year. The friendly takeover will create Europe's fourth listed largest real estate group with €19.3 bn of assets and has been supported by Eurosic's main shareholders. Last year Eurosic beat Gecina in a tussle to take over €2.6 bn French REIT Foncière de Paris. 

Meanwhile, French retail giant Carrefour is merging Carmila, its €5 bn listed property owner, with its development unit, Cardety which has €100 mln of assets.

It's not only French capital that is involved in the consolidation wave in the country: Chinese conglomerate Fosun is to mount a full takeover of Paref, the listed French manager of €1.3 bn of real estate, later this year.

Central Europe
Consolidation is also taking place among listed real estate companies focused on Central and Eastern Europe. 

New European Property Investments (NEPI) and Rockcastle, two Johannesburg-listed buyers of CEE property, completed their merger in recent days. The entity now trading on the Amsterdam stock exchange as NEPI Rockcastle manages some €4 bn of bricks-and-mortar, plus €1.3 bn of listed securities. 

Meanwhile the turbulent courtship between Vienna-listed CEE investors Immofinanz and CA Immo is currently in suspension. This was caused by Immofinanz delaying the sale last December of five shopping centres in the weak Russian market, a precondition of the merger. 

Frank Nickel, CEO of CA Immo, indicated the Russia assets must be disposed of by the fourth quarter of this year to avoid the collapse of the alliance. 'We think the end of patience will be reached in 2018 and then the merger should really take place,' he said in March. Should the asset sale go ahead on time, the merger will be put to a shareholder vote in May 2018. 

CA Immo had €3.7 bn of assets at end-2016, compared to the €4 bn at Immofinanz, though this figure will decline should sales in Russia be achieved.

Germany
By contrast, the Germany and Austria-focused merger of Vonovia, Germany's largest listed residential landlord, and Vienna-listed Conwert Immobilien appears to be on much firmer ground. 

Conwert shareholders are set to vote on the cash offer from Vonovia to squeeze out minority shareholders on 29 August. 

Vonovia took the driving seat in December 2016 when its €3 bn friendly cash offer for Conwert received backing from the majority of shareholders. As a result, Conwert's 24,500 residential units, mostly in Germany with a smaller amount in Vienna, will be added to Vonovia's 338,000 portfolio of German homes, which was valued at €24 bn on 19 December 2016. Conwert is in the process of disposing of its 'non-core' commercial real estate holdings.

In early July Swiss investment manager Corestate Capital acquired HFS Helvetic Financial Services, expanding its mezzanine real estate financing capabilities and funds business.
Corestate also announced that it had completed the integration of Hannover Leasing Group, which, along with the purchase of HFS, brings its assets under management to €20 bn.

Smaller mergers are also on the agenda elsewhere in Germany and the UK, while US-based Kennedy Wilson is set to fully incorporate its European listed unit into the group.

Completed deals
All this activity comes on top of 19 completed M&A and platform transactions in European real estate over the last 18 months.

The tally includes AEW, the Paris-headquartered European real estate investment manager, acquiring Ciloger, manager of €5 bn of property funds for French retail investors. The combination, under the AEW brand, created one of the largest real estate asset managers in Europe with over €24 bn of assets under management.  

The largest single transaction was CIC, the Chinese sovereign wealth fund, acquiring Logicor, Blackstone’s European logistics platform, for €12.2 bn.