Germany's Prime Office REIT has started negotiations to merge with non-listed OCM German Real Estate Holding, a subsidiary of private equity group Oaktree.
Germany's Prime Office REIT has started negotiations to merge with non-listed OCM German Real Estate Holding, a subsidiary of private equity group Oaktree.
'Should the talks progress positively, the companies plan to take the necessary steps that are required for a merger,' Munich-based Prime Office said.
The company, which posted funds from operations of €1.3 mln in the first quarter, did not disclose any details on the possible exchange ratio for the merger.
Oaktree, the owner of OCM German Real Estate Holding, is also Prime Office's largest shareholder with a stake of 7.9%. The merger, which would need approval by at least 75% of Prime Office's shareholders, would create a group with a gross portfolio value of around €2.3 bn, and annual rents of around €147 mln.
Market experts look positively at the deal which would provide the two companies with a more diversified portfolio. OCM's assets consists of a majority of multi-tenant properties, while Prime Office primarily owns single-tenant offices.
'There could be a positive outcome for Prime Office’s shareholders, depending on the exchange ratio, with the share having fallen continuously since the IPO in 2011,' commented analyst Kai Klose of Berenberg Bank in London.
The company is currently trading at a discount of more than 50% to the reported NAV per year-end 2012.
