EQT AB (publ) announces the signing of a combination (the “transaction”) with Exeter Property Group ("Exeter" which also includes funds), a leading global real estate investment manager with more than USD 10bn of assets under management ("AuM").
The transaction is part of EQT AB’s strategic growth ambitions within real estate and creates a scaled thematic investment platform across North America and Europe. It also provides Exeter management with the ability to continue their track-record as a top performing real estate investment manager. Furthermore, the transaction provides the ability to utilize synergies to further enhance investment performance and for the combined platform to benefit from EQT’s integrated approach to digitalization and sustainability.
Majority owned by Ward Fitzgerald and other Exeter management team, Exeter is focused on acquiring, developing and managing logistics/industrial, life science/office and residential properties mainly across the US and Europe. Founded in 2006, Exeter has built the business based on a hands-on, vertically integrated operator approach. With 37 local deal offices, Exeter combines local execution with a global reach, mirroring EQT’s local-with-locals approach. For 2020, Exeter is expected to generate approximately USD 135m in revenues and approximately USD 80m in EBITDA (excluding carried interest). The proposed consideration is expected to equate to a mid-teens EBITDA multiple on a run-rate basis at completion.
Christian Sinding, CEO and Managing Partner of EQT AB: “We are excited to accelerate our strategy of building a globally-scaled real estate platform and diversifying the firm within private markets by joining forces with Exeter. We have a high bar for strategic M&A, and Exeter is one of the few opportunities we have identified which clears and well surpasses it. With its value-creation-focused investment approach, one of the strongest track-records in value-add real estate globally, and importantly, a people-and-performance-centric culture, we are all well-aligned. I am delighted to welcome Ward and the Exeter team to the EQT family, and we are looking forward to working together to take EQT Exeter to the next level.”
Lennart Blecher, Head of EQT Real Assets and Deputy Managing Partner: “Scaling EQT’s real estate platform has been a key priority for EQT Real Assets. The combination of Exeter and EQT’s existing real estate business is highly complementary and creates a leader in thematic value-add real estate investments, allowing EQT to scale up local execution while also adding a prolific single asset deal platform. Exeter is a hidden gem with very strong performance due to a clear operational mindset. We believe this is synergistic for both parties, with EQT able to bring multiple benefits to the Exeter business with the strength of our industry and client relationships and our future-proofed operating platform.”
Ward Fitzgerald, CEO and Founder of Exeter: “EQT is a fantastic strategic and cultural fit for our business. We share a similar philosophy and investment approach, and we have a complementary global platform which can accelerate the growth of opportunities that we make available to both current and future clients. For our day-to-day activities, it will be business as usual. We will continue to be fully focused on driving returns by utilizing our unique local execution of small and mid-cap acquisitions, adhering to our real estate solutions ethic to our over 1,200 corporate client/tenants and directly performing our own leasing, property management and development. We are excited about the opportunity ahead of us to become more of a global leader in real estate by teaming with EQT.”
Key transaction details
Unaudited US GAAP financial information for the Exeter Group 3
Exeter senior management lock-up and employment
Share consideration for Ward Fitzgerald and other Exeter management shareholders will be subject to customary lock-up provisions, consistent with the lock-ups of current EQT partners, of which 25 percent is to be released in Q4 2022, 25 percent in Q4 2023 and 50 percent in Q4 2024. The lock-up agreements will also include a forfeit mechanism. Ward Fitzgerald and certain key members of the team will enter into new employment agreements at the time of completion. The terms and conditions will contain customary restrictive covenants, including non-compete and non-solicitation provisions.
EQT Exeter will be part of EQT Real Assets (consisting of EQT Infrastructure and EQT Real Estate today). The combined real estate platform will operate under a joint EQT Exeter brand following closing and the existing EQT Real Estate business line will be integrated into EQT Exeter. The ambition is that Exeter’s professionals will remain in place and will retain their participation interests in fund performance. EQT is committed to maintaining the leadership, business model, personnel, and culture that have supported Exeter’s success to date under the leadership of Ward Fitzgerald. Ward will join EQT AB’s Executive Committee. EQT Exeter will be run independently but will be able to utilize the broader EQT operating platform, in order to scale efficiently while retaining the key success factors of Exeter.
There will be no change to the group financial targets as a result of the acquisition of Exeter, with the combined real estate platform expected to grow faster than wider private market’s long-term growth rate and with EBITDA margins in line with the wider EQT AB group. The group’s dividend policy remains unchanged. Furthermore, carried interest is still expected to be between 25-30 percent of overall group revenues in the medium term.
EQT AB full year results
EQT AB also today announces its full year results for the year ended 31 December 2020, more information can be found at www.eqtgroup.com from 07.00 am CET.
J.P. Morgan acted as financial adviser to EQT AB in relation to the transaction, while Kirkland & Ellis and Vinge acted as legal counsel. Berkshire Global Advisors acted as financial adviser to Exeter, and Goodwin Proctor acted as legal counsel.
Contact person for MAR purposes
Nina Nornholm, Head of Communications, +46 70 855 03 56
The information in the press release is information that EQT AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person above, on 26 January 2021 at 06.45 (CET).
Olof Svensson, Head of Shareholder Relations, +46 72 989 09 15
Nina Nornholm, Head of Communications, +46 70 855 03 56
EQT Press Office, firstname.lastname@example.org, +46 8 506 55 334
This press release contains forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond EQT’s control, which may cause actual results to differ significantly from those expressed in any forward-looking statement. All forward-looking statements reflect EQT’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, EQT disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes.
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1 The volume weighted average closing price of EQT’s common shares for the 30 trading days preceding the date that is one the date of the agreement.
2 Subject to adjustment based on Exeter’s balance sheet at closing
3 The entitlement to carried interest acquired by EQT is in more recent generation funds that are yet to generate carried interest. Therefore, the financial information in the table does not include historical carried interest