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Fairness Opinion on the assessment of the financial adequacy of the exchange ratio in the context of the planned merger between Novavest Real Estate AG and SenioResidenz AG
On 18 April 2024, Novavest Real Estate AG (Novavest) and SenioResidenz AG (SenioResidenz) announced that the parties have entered into a merger agreement for the merger of the two firms. Both companies are very well established in the Swiss real estate market and have excellent quality real estate portfolios in their respective investment segments. The merger requires the approval of the shareholders of both companies in order to be realized.
The Board of Directors of Novavest will propose to the Extraordinary General Meeting on 29 May 2024 to create 2,325,479 fully paid-in Novavest registered shares with a par value of CHF 22.75 by means of an ordinary capital increase and create conditional capital, from which 134,002 registered shares with a par value of CHF 22.75 will be required to convert the mandatory convertible bond. The new Novavest shares resulting from the ordinary capital increase and the conditional capital will be created under exclusion of the subscription rights of existing Novavest shareholders. The new shares will be used to exchange the existing SenioResidenz shares and to convert the mandatory convertible bond of SenioResidenz AG. Upon exchange, shareholders in SenioResidenz AG will receive 0.91 registered shares in Novavest Real Estate AG with a par value of CHF 22.75 for each SenioResidenz share with a par value of CHF 40.40 they hold. Any fractions resulting from exchange will be compensated in cash. For each CHF 1,000 nominal value of SenioResidenz AG's mandatory convertible bond, bondholders will receive 22 registered shares in Novavest Real Estate AG with a par value of CHF 22.75 and a fraction of 0.1411 Novavest registered shares, which will be settled in cash. Following the exchange and conversion of the mandatory convertible bond as part of the merger, the share capital of Novavest Real Estate AG will amount to CHF 231,388,316.25, divided into 10,170,915 registered shares with a nominal value of CHF 22.75 each. The registered shares of SenioResidenz AG will be delisted from BX Swiss as part of the merger. The newly issued registered shares of Novavest Real Estate AG will be listed on SIX Swiss Exchange. The first dividend entitlement of all new shares will be for the 2024 financial year.
The merger will create an attractive and resilient portfolio with a focus on “living for young and old” with a pro forma combined residential share 59%. Novavest Real Estate AG had a residential share of 63% of target rental income in its portfolio focussed on residential use at the end of 2023. This will be complemented by the merger with SenioResidenz AG, whose portfolio focuses primarily on senior-friendly and assisted living, senior residences and care facilities (residential proportion 48%). The composition of the combined real estate portfolio will ensure optimal diversification in terms of uses as well as macro- and micro-locations in Switzerland. The housing needs of the younger population (e.g. due to immigration, limited new building) as well as the demographic changes resulting from the ageing population support the merged company’s combined medium- and long-term investment strategy.
IFBC prepared an independent Fairness Opinion for the Boards of Directors of Novavest and SenioResidenz to assess the financial adequacy of the proposed exchange ratio of the planned merger between Novavest Real Estate AG and SenioResidenz AG. Based on the analyses and value considerations performed, IFBC assesses the exchange offer of 0.91 Novavest shares for one SenioResidenz share in the context of the planned merger between the two firms as of 15 April 2024 as fair and adequate from a financial point of view. IFBC specializes in the preparation of Fairness Opinions, is a particularly qualified evaluator (accreditation by the Swiss Takeover Board pursuant to Art. 30 para. 6 TOO) and is the Swiss market leader in this field.
NOVAVEST is a Swiss real estate company based in Zurich. It focuses its activities on the management and development of properties with purely residential use (rental income share from residential use at least 50% of total rental income) and with office and commercial use, as well as on new construction projects in these segments. The real estate portfolio is concentrated on properties located in the area of the centers of Zurich, Basel, Berne, Winterthur, Lucerne, St. Gallen and Aarau as well as on their axes, each with good accessibility by public transport or motorized private transport.
SenioResidenz is active in the real estate sector with its registered office in Zurich. SenioResidenz activities are focused on investments in selected properties which are primarily for seniors’ living and care facilities. This includes apartments for the elderly, properties that enable assisted, self-determined, senior-friendly living and housing, as well as retirement and nursing homes, clinics and medical centres. As a secondary strategy, the company may also invest in other types of non-permanent housing, such as furnished and unfurnished student apartments, business apartments and/or staff apartments and houses.
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