DGAP-News: CONSUS plans indirect participating interest of 50.0 percent in CG Gruppe AG

CONSUS plans indirect participating interest of 50.0 percent in CG Gruppe AG

- CG Gruppe is the second largest developer in Germany's A cities and has a current project volume of around EUR 4.7 billion

- Digitalisation, in-house construction competence with industrial pre-production and low-risk institutional business

- EBITDA alone of over EUR 830 million expected between 2018 and 2022 with continued strong pipeline

- Acquisition financing planned using mixed non-cash capital increase

Leipzig, 23 August 2017 - CONSUS Commercial Property AG ("CONSUS", ISIN DE000A2DA414) is planning to acquire an indirect 50.0 percent participating interest in CG Gruppe AG ("CG Gruppe"). CONSUS current investment business in the commercial real estate sector will thus be supplemented with extensive activities in developing residential and commercial projects in top-quality German locations. Both business segments will be consequently expanded , and the successful servicing cooperation with publity AG will built upon. The combination of repeat rental income and high project revenues means that CONSUS will then be able to offer an extended business model and grow in a totally new dimension.

General meeting to propose mixed non-cash capital increase

In order to implement the transaction, CONSUS is planning to acquire an indirect interest a 50% interest in CG Gruppe. The seller is Aggregate Deutschland S.A. ("Aggregate"). A corresponding agreement has been signed by CONSUS and Aggregate. The purchase price will be financed using a mixed non-cash capital increase composed of newly issued shares and a debt issue. This is to be propoed to shareholders at the CONSUS General Meeting on 28 September 2017. The Managing Board used the weighted average three-month price of CONSUS' shares based on 10 August 2017 in the amount of EUR 10.6622 per share as the basis when valuing the new shares of CONSUS. The transaction is set to be concluded in the fourth quarter of 2017 and its execution is subject to approval by CONSUS' shareholders on the relevant agenda items. In total, 55,650,383 new CONSUS shares and a bond with a volume of EUR 150.0 million are to be issued to Aggregate to settle the purchase price. This contribution thus has a total value of around EUR 743.4 million. At the same time shareholders attending the General Meeting are to vote on changing the company's name to "CONSUS Real Estate AG".

Major project developer at top locations

According to German real estate analyst bulwiengese, CG Gruppe ranked #2 among developers in German A cities, with additional extensive projects in attractive secondary locations in Germany. In total, the fixed project space currently planned or under construction totals around 1.3 million square meters. These projects in locations including Berlin, Leizpzig, Dresden, Frankfurt/Offenbach, Cologne, Düsseldorf and Hamburg amount to around EUR 4.7 billion in total expected revenues.

Digitalisation, industrialisation and in-house construction competence are competitive advantages

As a pioneering innovator in property development, CG Gruppe holds a prominent position on the German market. The company underscores this position, for example, with its consistent and evolving digitalisation with regards to planning and construction (building information modelling) as well as through its growing implementation of top-quality industrially pre-produced serial components. This, in combination with CG Gruppe's extensive in-house construction competence, implemented using the company's own employees at construction, enables significant double-digit cost savings compared to historic market standards, and thus substantially higher margins.

Forward sales to well-known institutional investors improves reliability of revenues

CG Gruppe's core business is large-volume residential project developments for well-known institutional customers, many of whom secure their access to the projects at an early stage using forward sales. These currently account for more than half of the project volume in this business segment. As a result, the project revenues and cash flows in the CG Gruppe are more secure and can be more reliably forecast. In addition to project developments for commercial properties CG Gruppe is increasingly involved in revitalising high-rise buildings in top German cities under its "VauVau" brand, which generates increasing ongoing rental income for the group as the number of projects is completed.

Project pipeline and rental income generate high revenues and profits

Revenues from project proceeds and rental income for CG Gruppe are forecast to total an accumulated value of more than EUR 3.5 billion between 2018 and 2022 with increasing visibility. Accumulated EBITDA in this period is expected to total more than EUR 830 million. In the years following 2020 additional projects totalling several billion euros with comparable EBITDA margins are expected to completed. CG Gruppe believes that it will then generate long-term sustainable EBITDA in the high triple-digit million euro range annually.

Combined potential of CONSUS and CG Gruppe

CG Gruppe was formed by Christoph Gröner more than 20 years ago, and he continues to lead the company as its CEO. The company currently has more than 300 employees at its various locations throughout Germany. Norbert Kickum is Chairman of the Supervisory Board. His previous positions have included Spokesperson for the Managing Board of Airbus Group Bank, Member of the Managing Board of FMS Wertmanagement, as well as Member of the Managing Board at Aareal Bank.

Stanley Bronisz, member of CONSUS' Managing Board: "Our plan to enter CG Gruppe will open up substantial potential for our company's growth, quickly catapulting us into a new dimension. I believe that CG Gruppe, as one of the largest and most innovative German project developers, offers CONSUS substantial operational benefits as a result of its attractive pipeline of around EUR 4.7 billion and the potential for enlarging our portfolio of commercial properties. This means we can offer investors a business model that links stable repeatable cash flows with the additional potential for high returns."

Norbert Kickum, Aggregate's CEO and Chairman of CG Gruppe's Supervisory Board: "After the transaction has been concluded, Aggregate will hold an interest of almost 70 percent in CONSUS. We look forward to a successful, joint future for CONSUS and CG Gruppe. In the future national and international investors will also be able to invest in a large, highly profitable project developer on the German stock market. We are thus filling a gap in the Geman stock exchange listings, a position for which real estate developers in capital markets in the UK and USA already have established a successful tradition."

Christoph Gröner, CG Gruppe's CEO: "We are pleased to welcome a strategically important new partner. This is a key milestone for our company and opens up additional perspectives for both our companies on the German real estate and developer market."

Press contact:
edicto GmbH
Axel Mühlhaus/ Dr. Sönke Knop
Tel.: +49 69 905505-52
E-mail: [email protected]

About CONSUS Commercial Property AG

CONSUS Commercial Property AG ("CONSUS"), as an opportunity-oriented real estate investor, is dynamically assembling an investment portfolio focusing on office properties. Its value-added approach and its acquisition focus, including special situation properties, create an above-average potential to increase value and profits for CONSUS. The company specialises in properties with market values of between EUR 10 and 25 million and thus operates in an environment with less competition than that for other property sizes. CONSUS believes that the attractive net initial returns that can be realised in the value-added sector of this size category mean that it is well positioned for different market cycles and financing environments. Active asset management ensures that additional value and higher rental income can be realised from the portfolio. The aim of the company is to generate high funds from operations (FFO). In so doing CONSUS uses efficient structures and cooperates with leading partners in the German market when purchasing properties, processing deals and managing each asset.