Peach Property: Ares fund becomes new anchor shareholder

Peach Property Group, which specializes in German residential real estate, intends to strengthen its capital base to finance the recently announced portfolio acquisitions by issuing a mandatory convertible bond with a volume of around CHF 200 million. Of this, 150 million is to be subscribed by Ares.

The interest coupon will amount to 2.5% p.a. and the conversion price will be CHF 42.50 per share. The mandatory convertible bond will be converted into new registered shares on June 30, 2021, unless previously converted voluntarily. After the conversion of the bond, Ares will be the largest single shareholder of Peach Property Group AG with a stake of approximately 30%.

"We see the investment in Peach Property Group as an excellent opportunity to invest in one of the more defensive asset classes in Europe while benefiting from the attractive growth of Peach Property Group," said John Ruane, Co-Head of Ares European Real Estate Group.

Peach wants to open up to foreign investors

An extraordinary general meeting is to be held on October 12, 2020, to clear the way for the entry of Ares. The central item on the agenda will be the creation of new authorized capital in the nominal amount of 3.3 million, Peach said. Also on the agenda is the election of Klaus Schmitz to the board of directors. In this context, the board is to be expanded from currently four to five members. Schmitz is Managing Director of Ares Real Estate Group and specializes in equity financing in the European real estate sector.

In addition, Peach proposes a partial amendment to the Articles of Association to remove the registration restrictions for non-Swiss investors. This would allow foreign investors to become shareholders of Peach Property Group without restrictions in the future.

Renewed portfolio purchase

A few days ago, Peach announced the acquisition of 4,800 apartments in Germany. This grows the portfolio by 26% to more than 23,000 residential units and a value of more than CHF 2 billion. The seller and the purchase price were not disclosed, the company said.

The portfolio now acquired reportedly has a total residential area of 295,000 sqm and generates annualized actual rental income of around 19.9 million (18.7 million euros). The vacancy rate is 10.8%. Potential for value appreciation would come from, among other things, letting the currently vacant apartments, as well as from the fact that current rents are below current market levels in the respective locations, Peach said.

Around 2,100 apartments, or 44% of the portfolio, are located in the triangle between Wolfsburg, Braunschweig and Magdeburg, where the Group currently has a portfolio of around 100 apartments. Around 35% are located in North Rhine-Westphalia, with a further focus on Ludwigshafen in Rhineland-Palatinate. (ah)