Apollo Managed Funds to invest in DEMIRE as new strategic investor - Plan to accelerate DEMIRE 2.0 strategy

• New strategic investor -Apollo Managed Funds - undertakes to subscribe a 10% capital increase at an issue price of EUR 4.35 - 11.3% premium compared to latest closing share price
• Gross proceeds of EUR 23.6 million to be used to grow the business, including through acquisitions
• Strategic partnership between the shareholders Wecken Group and Apollo Managed Funds (cooperation agreement): Aim to jointly accelerate the implementation of the DEMIRE 2.0 strategy to develop DEMIRE into a leading listed German commercial real estate platform with a target portfolio size of over EUR 2 billion and with an investment grade rating
• Apollo Managed Funds announce mandatory takeover offer to the shareholders of DEMIRE - offer price of EUR 4.35
• Apollo Managed Funds announce takeover offer to the shareholders of Fair Value REIT-AG and intend to contribute FVR shares tendered into DEMIRE in exchange for DEMIRE shares

Langen, 26 February 2018 - Today, the managing board of DEMIRE Deutsche Mittelstand Real Estate AG (WKN A0XFSF / ISIN DE000A0XFSF0) (the "Company" or "DEMIRE"), with the consent of the Company's supervisory board, resolved to increase the Company's share capital against cash contributions by EUR 5,425,774.00, from EUR 54,270,744.00 to EUR 59,696,518.00, by issuing 5,425,774 new ordinary bearer shares with no par value (auf den Inhaber lautende Stückaktien) and with a nominal value of EUR 1.00 each and full dividend rights for the financial year beginning January 1, 2017 (the "New Shares"), from the existing authorised capital of the Company and under the exclusion of the subscription rights of the Company's shareholders for the New Shares (the "Capital Increase").

The New Shares shall be admitted for trading on the regulated market (regulierter Markt) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) without the publication of a prospectus with simultaneous admission to the sub-segment of the Frankfurt Stock Exchange with additional post-admission obligations (Prime Standard). AEPF III 15 S.à.r.l., an entity owned by Apollo European Principal Finance Fund III, both of whom are affiliates of Apollo Global Management LLC, (the "Apollo Managed Funds") has entered into a subscription agreement with the Company in which the Apollo Managed Funds undertake to subscribe for all New Shares. The New Shares will be issued at a price of EUR 4.35, which represents a 11.3% premium to the closing share price as of 26 February 2018. The Apollo Managed Funds are advised by an affiliate of the global investment manager Apollo Global Management, LLC (NYSE: APO) which manages approximately USD 249 billion (as of December 31, 2017). The Apollo Managed Funds' obligation to subscribe to the New Shares is conditional on clearance by the German Federal Cartel Office (Bundeskartellamt).

The Apollo Managed Funds have informed the Company, that they currently hold 150,000 shares of the Company, which represents a stake of approx. 0.28% in its current share capital, and that it has entered into agreements to purchase additional 1,089,061 shares. In connection with the Capital Increase, the Apollo Managed Funds have entered into a cooperation agreement with the Company's largest shareholder, Wecken und Cie. ("Wecken") and a subsidiary of Wecken und Cie. as well as members of the Wecken family (together with Wecken, the "Wecken Group"), who collectively hold a stake of 29.91% in the Company's current share capital and who hold collectively exchangeable bonds, which allow to purchase 10.23% of the Company's current share capital. As a result of its acquired control over the Company, the Apollo Managed Funds will announce a mandatory tender offer to the shareholders of the Company at a price of EUR 4.35 per share today. The Company has been informed by the Apollo Managed Funds and Wecken Group that the Company's listing is to be maintained post the takeover offer.

The Company was also informed by the Apollo Managed Funds, that they will announce their decision to launch a voluntary takeover offer to acquire all shares in Fair Value REIT-AG ("FVR") today. The Apollo Managed Funds intend to launch the offer in such a way that it is also an offer enabling the revoke of the listing of FVR shares at the regulated market of the Frankfurter Wertpapierbörse (so called delisting offer). The FVR-Offer will be equal to the legal minimum price. The Company is supportive of such a FVR-Offer. Certain subsidiaries of the Company holding shares in FVR have entered into a non-tender agreement with the Apollo Managed Funds, in which they undertake not to accept, in full or in part, the FVR-Offer with respect to the shares of FVR that they hold, which in total correspond to 77.70% of the outstanding shares of FVR. Following the takeover offer, Apollo Managed Funds intend to contribute FVR shares tendered into DEMIRE in exchange for DEMIRE shares.
DEMIRE intends to use the gross proceeds of the Capital Increase of EUR 23.6 million - less transaction costs in relation to the Capital Increase - to finance acquisitions of attractive properties in secondary locations in Germany. In parallel, DEMIRE continues to implement the initiated measures to further optimise its profitability and group structure with the support of its two strategic shareholders. The Company expects a substantial improvement of its financial and profitability metrics already for the fiscal year 2017 and the current fiscal year and continues to focus on growing its portfolio and active asset management to create value in its existing portfolio. DEMIRE aims to further reduce its leverage in the medium term and improve its credit risk profile to investment grade level in order to accelerate the future growth of the Company via an optimal, balanced and flexible financing structure.

The Apollo Managed Funds and Wecken Group support the DEMIRE 2.0 strategy and contribute their financial and sector expertise to develop the Company into one of the leading listed German commercial real estate platforms with a target portfolio size of over EUR 2 billion in the medium term.

Ralf Kind, CEO/CFO of DEMIRE: "We are delighted to welcome Apollo as an experienced and strategic investor who jointly with our other core shareholder fully supports the DEMIRE 2.0 strategy and also actively supports the planned growth of the Company. The business model of DEMIRE offers high potential for value creation in the German commercial real estate market that we would like to exploit in the next months and years. In addition, the already identified internal value drivers offer additional earnings potential to further increase the attractiveness of DEMIRE."

Sebastian-Dominik Jais, a Partner at Apollo responsible for real estate investments in the European Principal Finance funds, stated, "We are looking forward to contributing to the future growth of DEMIRE. The investment by the Apollo Managed Funds is the result of a thorough review of the German real estate market, and we are excited about DEMIRE's strategy and positioning which we will help to support in partnership with Klaus Wecken and his family office."

Klaus Wecken commented: "Wecken & Cie. started to invest into DEMIRE in 2015 and developed the investment in 2017 to a strategic level, identifying DEMIRE's huge value potential in the German commercial real estate market. We are proud to have Apollo as a strategic partner working together with us from now on. Through DEMIRE 2.0 the way is set for the next stage in the evolution of the company, and we believe Apollo has the capital and the right strategic and cultural fit to support DEMIRE as we will continue to diversify and expand the company."

DEMIRE is being advised by Rothschild and Hogan Lovells in connection with the transaction.

 
Contact
DEMIRE Deutsche Mittelstand Real Estate AG
Robert-Bosch-Straße 11
D-63225 Langen
Telefon: +49 (0) 6103 - 372 49 - 0
Telefax: +49 (0) 6103 - 372 49 - 11
ir@demire.ag
www.demire.ag
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About DEMIRE Deutsche Mittelstand Real Estate AG
DEMIRE - First in Secondary Locations
 
DEMIRE Deutsche Mittelstand Real Estate AG has commercial real estate holdings in mid-sized cities and up-and-coming locations bordering German metropolitan areas. As of September 30, 2017, DEMIRE held real estate with a value of approx. EUR 1 billion. As of the reporting date, annualised contractual rents had been firmly agreed upon in the amount of circa EUR 72 million for an average term of 4.8 years. DEMIRE Deutsche Mittelstand Real Estate AG shares (ISIN: DE000A0XFSF0) are listed in the Prime Standard segment of the Frankfurt Stock Exchange.
 
About Apollo Global Management, LCC
Apollo Global Management, LLC (together with its consolidated subsidiaries, "Apollo ") is a global alternative investment manager. Since its foundation in 1990, Apollo has grown to become one of the world's leading alternative investment managers. Apollo manages funds on behalf of numerous pension and endowment funds as well as other institutional and individual investors. Apollo had total assets under management of approximately $249 billion as of December 31, 2017, employed a team of 1,047 employees, including 387 investment professionals that operate out of 15 offices across the world. Apollo has extensive sector knowledge and pursues a value-based investment strategy in private equity, credit and real assets. In the last five to ten years, Apollo believes it has been one of the most active real estate investors in Germany, having successfully acquired and sold real estate with an aggregate value of several billion dollars. Apollo pursues a holistic and value-oriented approach which it believes substantially differentiates itself from a number of other alternative investment managers. Apollo generates attractive returns for its investors via actively deploying capital to industry leading companies and opportunistic business models.
 
About Wecken & Cie.
After founding and selling a number of companies, mainly in software (KHK Software AG Frankfurt) and real estate (Tivona AG Basel), from 2007 Klaus Wecken started venture capital investments in more than 40 companies, through his single family office Wecken & Cie. in Basel, mainly in the fields of internet, software, medtec and real estate. Wecken & Cie.'s main investments in listed real estate companies are Swiss Prime Site AG (largest Swiss real estate company), DEMIRE Deutsche Mittelstand Real Estate AG (German commercial real estate) and ADLER Real Estate AG (German residential real estate).