German banking company Aareal Bank Group has agreed to acquire Düsseldorfer Hypothekenbank, a specialist for commercial real estate financing, for an initial purchase price of around €162m.
The final acquisition price will be based on market price fluctuations until the closing date, said Aareal Bank, which signed the deal to acquire all shares of Düsseldorfer Hypothekenbank after completion of negotiations with the Association of German Banks (Bundesverband Deutscher Banken).
The Germany banking company added that it will not target any further strategic objectives with the deal and Düsseldorfer Hypothekenbank had gone through a run-down process since 2015, under its previous owner.
Further, Düsseldorfer Hypothekenbank has stopped from actively originating new property finance business on the market. The company’s residual lending volume totaled to €533m as of 30 June 2018.
Aareal Bank said that it would consistently pursue the orderly run-down of the acquired company.
Aareal Bank Management Board chairman Hermann Merkens said: “With the acquisitions executed over the past few years, Aareal Bank has shown its skills in running down portfolios in an orderly, value-preserving manner, and in the swift, responsible integration of mortgage banks.
“We will leverage this expertise in the case at hand. At the same time, we have once again demonstrated our willingness and ability to exploit opportunities available on the market, in order to generate value for our shareholders.”
Aareal Bank expects the acquisition to result in a positive one-off effect from initial consolidation in the amount of around €52m. The German banking group said that its operating profit for the 2019 financial year will presumably be burdened by the acquisition in a very low double-digit million amount.
Headquartered in Wiesbaden, Aareal Bank is a global property specialist which has employees from 30 nations and has operations in Europe, North America and Asia. The German bank provides financings for commercial property, especially for office buildings, logistics, hotel, retail, and residential properties.