Aareal Bank owners hire advisers to sell property lender's tech arm, sources say

Aareal Bank AG

14/03/2024 10:18

By Amy-Jo Crowley, Emma-Victoria Farr and Pablo Mayo
Cerqueiro
       LONDON/FRANKFURT, March 14 (Reuters) - The owners of
Aareal Bank have lined up advisers to sell its tech unit, three
people familiar with the matter told Reuters, as the German
property lender navigates a global crunch in commercial real
estate.
    The shareholders, led by Advent International and
Centerbridge Partners, recently chose Arma Partners to gauge
interest in the division, known as Aareon, the people said. They
may tap another investment bank as well, the people said. 
    Other buyout groups including Blackstone  BX.N , CVC Capital
Partners, Hg Capital and KKR & Co  KKR.N  have been eyeing the
unit ahead of an auction planned for later this year, one of the
sources said, speaking on condition of anonymity because the
talks are private.
    Aareon, which offers property management software, was
valued at 960 million euros ($1.05 billion) when Advent acquired
a minority stake in the company in 2020, before taking parent
Aareal Bank private last year as part of an investor consortium.
    The unit's valuation has significantly increased since then,
a second source said, without specifying a number. 
    Aareal expects the division to generate up to 170 million
euros in core earnings this year, up from 100 million euros in
2023, according to its latest guidance.
    Aareal Bank, Advent, Blackstone, Centerbridge, CVC, Hg and
KKR declined to comment. CPP Investments, another shareholder in
Aareal, declined to comment, while Goldman Sachs, also an
existing investor, did not respond to a request for comment.
    Arma Partners and its parent Mediobanca did not respond to a
request for comment.
    Wiesbaden-based Aareal Bank is battling a global slump in
commercial property values and concerns about lenders' exposure
to the sector.
    The bank said in February that a quarter of its 4 billion
euros in loans for U.S. offices were likely to go unpaid,
warning there could be more to come as the property rout takes
hold.
    The message came just days after agency Fitch downgraded its
credit rating to BBB, two notches above junk.
    Despite the challenges, the group has said it does not
expect to need fresh capital and is targeting up to 350 million
euros of operating profit this year. 

($1 = 0.9128 euros)

 (Reporting by Amy-Jo Crowley, Emma-Victoria Farr and Pablo Mayo
Cerqueiro; Editing by Anousha Sakoui and Sharon Singleton)
 ((amy-jo.crowley@thomsonreuters.com))