conwert management does fully right to refuse hostile action of Adler

MountainPeak to gain control (Buy affirmed, target still 15 Euros)

Frankfurt, (PresseBox) - SRC Research the bank-independent analysts house for Financials and Real Estate stocks today presents a rating update about Vienna-based residential property player conwert Immobilien. The company has an approx. Euro 2.8bn portfolio. The major part of the portfolio is residential, about 75%.

Yesterday evening, the Austrian Blue Chip residential property player released an adhoc news that one of the shareholders, the Cyprus-based MountainPeak Trading Limited, a subsidiary of German Adler Real Estate AG, requested an extraordinary shareholder meeting. The targeted agenda for this extraordinary meeting is the suspension of three members of the administrative board, including the chairman Barry Gilbertson. Another target is the reduction of the actual number of administration board members to be elected from the general meeting from 5 persons to 4 persons.

For the three board members, which Adler would like to replace, Adler nominated 3 persons who are very close to Adler or to other shareholders like Petrus Advisers. Namely the proposed persons are Dirk Hoffmann (chairman of Adler supervisory board), Hermann Anton Wagner (chairman of DEMIRE Real Estate supervisory board) and Wijnand Donkers, a business partner of Petrus Advisers.

It is very evident that some single shareholders try to gain control over the admin board and thus over the entire company which is a hostile action. The conwert management certainly also considers this step as a hostile action and did refuse the proposal for an extraordinary general meeting this morning.

The members of the conwert administrative board are elected on a regular basis by the general meeting until 2019 and 2020, respectively. They have a broad management experience and the numbers of 2015, which are known so far, speak a very clear and positive language. 9M 2015 net profit came back to black with a tremendous swing to Euro 65m, EBIT almost doubled, FFO hiked by 50% und the vacancy was significantly reduced. conwert was also clearly above plan with the sale of its non-core assets. We refer to the recent company news from 21 January.

All in all, we have to state that conwert is on a good way with its CEO Dr. Wolfgang Beck. Thus, there is no logic from the operating business to fully change the setting of the administrative board. Also keep in mind, that Adler Real Estate has a much higher leverage than conwert and any kind of a business combination would lead to a value dilutive situation for conwert shareholders. We welcome the step of the conwert Executive Committee and the conwert Administrative Board to refuse this hostile plan. We maintain our Buy recommendation for the conwert share and also keep our Euro 15 target price. The 2015 annual report is to be published on 23 March. For any queries regarding this conwert update please do not hesitate to contact us.

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