Written by Amy Jo Crowley, Emma Victoria Farr, and Pablo Mayo Cerqueiro
LONDON/FRANKFURT (Reuters) – Areal Bank owners have appointed advisers to sell their high-tech unit as the German real estate lender weathers the global commercial real estate crisis, people familiar with the matter say. three people told Reuters.
Shareholders led by Advent International and Centerbridge Partners recently selected Alma Partners to gauge interest in the unit, known as Arleon, according to people familiar with the matter. Other investment banks may also be used, the people said.
Other buyout groups including Blackstone, CVC Capital Partners, Hg Capital and KKR & Co are eyeing the sector ahead of an auction scheduled for later this year, one of the people said. The person spoke on condition of anonymity because the negotiations are private.
Aareon, which provides real estate management software, was valued at 960 million euros ($1.05 billion) when Advent acquired a minority stake in the company in 2020, and its parent company Aareon was subsequently acquired by a consortium of investors last year. As part of this, it was made private.
The unit's valuation has increased significantly since then, another source said, declining to provide figures.
Aareal expects the division's core profit to be up to €170 million this year, up from €100 million in 2023, according to its latest guidance.
Aareal Bank, Advent, Blackstone, Centerbridge, CVC, Hg and KKR declined to comment. Aareal's other shareholder, CPP Investments, declined to comment, while Goldman Sachs, another existing investor, did not respond to a request for comment.
Arma Partners and its parent company, Mediobanca, did not respond to requests for comment.
Wiesbaden-based Areal Bank is battling a global downturn in commercial real estate values and concerns about lenders' exposure to the sector.
In February, the bank announced that a quarter of its 4 billion euros in U.S. office loans could go unpaid, and warned that further repayments could occur as the real estate outflow picks up steam.
The message came days after financial institution Fitch downgraded the company's credit rating to BBB, two notches above junk.
Despite the challenges, the group said it does not expect to need any new capital and is targeting operating profits of up to 350 million euros this year.
(1 dollar = 0.9128 euro)
(Reporting by Amy Jo Crowley, Emma Victoria Farr and Pablo Mayo Cerqueiro; Editing by Anusha Sakoui and Sharon Singleton)
