DGAP-News: Consus Real Estate AG: Consus announces significant sale of development projects, accelerating its deleveraging strategy, alongside the acquisition of the remaining minority stake in its largest subsidiary

Consus announces significant sale of development projects, accelerating its deleveraging strategy, alongside the acquisition of the remaining minority stake in its largest subsidiary

- Upfront sale of 17 development projects with a GDV of EUR 2.3 billion

- Reduction in project debt of around EUR 475 million

- Sale realized a double digit premium to market valuation

- Consus to acquire remaining 25% minority stake in its largest subsidiary

Consus Real Estate AG ("Consus") announced on 8 May 2020 a significant asset sale as part of its deleveraging strategy. The total transaction value amounted to around EUR 690 million with an initial reduction of project debt of around EUR 475 million. The agreed sale price represented a double digit premium to the market values as at 31 December 2019. The total gross development value ("GDV") of the development projects disposed of is EUR 2.3 billion. In addition, Consus has in principle decided to acquire the remaining 25% minority stake (on a fully diluted basis) in Consus RE AG (formerly CG Gruppe AG) primarily against issuance of new Consus shares and a cash component in order to simplify its corporate structure.

Andreas Steyer, CEO of Consus Real Estate, commented "This transaction demonstrates again that Consus' residential focused projects are a robust asset class that can demand strong values even in uncertain economic conditions. The sale of these projects is a major milestone in our plans to materially deleverage and further reduce development and business risks. The acquisition of the minority in Consus RE, our largest subsidiary, is the final step in integrating our corporate structure and streamlining our operations."

Consus deleveraging accelerated

Consus has sold 17 development projects with a GDV of EUR 2.3 billion to Gröner Group GmbH for a total transaction value of around EUR 690 million, subject to standard closing adjustments. This upfront sale will reduce project debt by around EUR 475 million, and will result in a material cash payment. In the medium term, a portion of the proceeds will be reinvested in new development projects. The transaction is expected to close not later than Q3 2020.

The gross book asset value will decrease in a similar proportion to the GDV reduction, resulting in a net overall reduction in LTV. The disposal will positively impact Net Debt/Adjusted EBITDA, through the reduction in Net Debt and the increase in Adjusted EBITDA.

Consus portfolio post disposals

The divested development projects primarily consist of projects located in non-core locations, including Karlsruhe, Erfurt and Hamburg, and with a greater proportion of commercial uses, further focusing Consus' portfolio on residential developments in top 9 cities. Consus continues to believe that German residential real estate in the top 9 cities will prove to be one of the most robust asset classes despite the Coronavirus pandemic, and this transaction further increases that focus.

Following the sale, the proportion of Consus' GDV within the top 9 cities will have increased to over 95% from 86%. Reflecting the strategy of Consus as a residential-focused developer, the sale will increase the percentage of residential up to 57% from 52%.

With this sale, Consus will have achieved total upfront sales year to date of over GDV EUR 2.3bn, and will have a remaining development portfolio with a GDV of EUR 10.0 billion. The proportion of the remaining portfolio that has been forward sold, is under LOI or in negotiation for a forward sale will increase materially to 28% from 23%, further reducing development and business risks. Of the 17 sold development projects, 7 projects are under construction with the remaining 10 projects either being in development with construction expected to start in 2021 or 2022, or were yielding assets that Consus had been planning to dispose of. Only four of the projects disposed of (Quartier C, GEM H Portfolio, Wachendorff Quartier and Plagwitz) were in the top 25 projects.

Acquisition of remaining 25% minority stake in Consus' largest subsidiary

In line with its ongoing integration of all operations and simplification of its corporate structure, Consus has in principle decided to acquire the outstanding 25% minority stake (on a fully diluted basis) in Consus RE AG (formerly CG Gruppe AG) primarily against issuance of new Consus shares and cash. The preliminary consideration for the 25% minority stake purchase shall amount to EUR 27.5m in cash and 24.75m Consus shares and is subject to further steps. The Consus RE shares will be acquired from Christoph Gröner, the founder CG Gruppe, through a company he controls.

Following the transaction, Consus RE AG will be converted to a GmbH and Christoph Gröner will resign as a supervisory board member of Consus RE as its supervisory board structure will be no longer be required. The transaction is expected to close not later than Q3 2020.

Outlook and guidance

The upfront sale of EUR 2.3bn of GDV demonstrates the existing value in Consus projects in the current environment. Consus has already exceeded its target of EUR 2bn GDV of upfront sales for 2020, and continues to be positive about ongoing interest in the company's developments, in particular in relation to upfront sales. The disposals will significantly accelerate the deleveraging of the company.

Consus continues to maintain its previously communicated guidance of an Adjusted EBITDA of approx. EUR 450m in 2020, an adjusted EBITDA margin of approx. 20% and a target Net Debt / adjusted EBITDA of around 3x in the medium term.

Consus does not assume at this point in time that the Coronavirus pandemic will have a material impact on the Group's business. Existing forward sales contracts are continuing largely unaffected; however, certain upfront sales and new forward sales are currently delayed and our plans, including these sales being completed as originally assumed, are dependent on the scale of negative impacts caused by the Coronavirus pandemic and the success of any counter measures. Although there is a risk to asset prices, Consus continues to believe that German residential real estate will prove to be one of the most robust asset classes despite the Coronavirus pandemic. Consus will continue to assess any potential macro-economic and industry-related impacts as well as any impact on the Group's business, either directly or from reduced economic visibility, and will update the market as appropriate.

Contact
Investor Relations: +49 30 96535790264
Email: [email protected]

About Consus Real Estate AG

Consus Real Estate AG ("Consus"), with its headquarters in Berlin, is the leading real estate developer in the top 9 cities in Germany. As of 31 December 2019, Consus' development portfolio had a gross development value (GDV) of EUR 12.3 billion. Consus focuses on the development of neighbourhoods and standardised multi-storey residential construction, which are sold to institutional investors through forward sales. Due to its own construction expertise and the digitalisation of construction processes, Consus operates along the entire value chain of real estate development. Consus provides the realisation of projects from planning and execution to handover, property management and related services through its subsidiaries Consus RE AG and Consus Swiss Finance AG. The shares of Consus are included in the scale segment of the Frankfurt Stock Exchange and the m:access segment of the Munich Stock Exchange and are traded via XETRA in Frankfurt, among others.