• Analysts diagnose upside potential of well over 30 percent
  • Upside target: 4.90 euros
  • Profitability boosted by portfolio expansion

Berlin, 17 June 2014 - Baader Bank, one of the most renowned equity research houses in Germany's residential real estate segment, started its coverage of WESTGRUND AG with a 'Buy' recommendation, quoting an upside target of 4.90 euros. Compared to the current share price, this would imply an increase by more than 30 percent. Baader Bank considers WESTGRUND an attractive niche provider on the German residential property market. The bank suggested that the foundation for the sought portfolio growth to somewhere between 20,000 and 30,000 units has now been laid, and that WESTGRUND shares present an attractive investment opportunity.

The combination of portfolio acquisitions, high acquisition yields and low financing charges has considerably enhanced the profitability of WESTGRUND, according to Baader Bank. The bank's analysts assume in their calculations that the FFO or EBITDA will more or less triple between 2014 and 2016. Baader therefore expects the company to start paying dividends in 2015.

The highly favourable development potential is backed, according to Baader, by a sound long-term financing structure with a comfortable debt ratio and low average interest rate. At this level, the analysts see no refinancing risk for WESTGRUND AG.

Compared to other residential real estate companies, Baader Bank also believes that the property valuations range at the lower end of the scale and that the upside potential outweighs the impairment risks.

Rising Profitability through Portfolio Expansion

Baader estimated that the continued growth sought by WESTGRUND can be realised specifically via the existing flexible and lean corporate platform, a high-powered network, experience in identifying new purchase opportunities, access to funding both through the current shareholders and through new equity investors, and a strong management team. "In the opinion of Baader, our company satisfies all of these requirements," said Sascha Giest, CFO of WESTGRUND AG. "That is what makes analysts convinced that we will achieve our stated growth targets."

As the analysis by Baader Bank suggests, WESTGRUND AG has demonstrated its asset management competency with the performance of its proprietary portfolio, having lowered the vacancy rate while increasing the rental income. With a view to the current portfolio and the recently refinanced debt, the Baader Bank analysts expect this year to bring a surge in profitability. The bank added that the announced acquisitions would boost profitability even further because WESTGRUND is in a position to buy at a relatively high rate of return between 8 and 12 percent, and to obtain affordable financing for them as well. The new portfolios will effectively spur the ongoing effort to enhance the going concern value of WESTGRUND, the bank concluded.

About Westgrund AG:

Westgrund AG is a Berlin-based real estate company with an opportunistic approach. With a clear focus on housing, the company buys, manages, and develops residential portfolios with appreciation potential in various regions in Germany that are marked by auspicious and sound micro-environments. The company takes an active asset management approach to raise the value-add in sustainable ways. Portfolio hot-spots include the Berlin metro area, North Rhine-Westphalia, Lower Saxony, and the Rhine-Main metro region.

The company's medium-term plan is to enlarge its housing stock to 20,000 apartments.

The shares of WESTGRUND AG (WKN: A0HN4T, ISIN: DE000A0HN4T3) are admitted to the regulated market in Düsseldorf and trade there, while also being listed and traded, inter alia, on the Xetra trading platform of the Frankfurt stock exchange.

Contact:

WESTGRUND AG

Management Board: Arndt Krienen, Sascha Giest

E-mail: vorstand@westgrund.de

Westgrund AG

Joachimstaler Strasse 34

D-10719 Berlin

Germany

Phone:+49 30 6396192 0

Fax: +49 30 6396192 28

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