Obligation Aggregate Holdings 6.875% ( DE000A28ZT71 ) en EUR

Aggregate Holdings

100 % ▲

Luxembourg

DE000A28ZT71 ( en EUR )

6.875% par an ( paiement annuel )

09/11/2025

Prospectus brochure de l'obligation Aggregate Holdings DE000A28ZT71 en EUR 6.875%, échéance 09/11/2025

1 000 EUR

382 000 000 EUR

09/11/2025 ( Dans 195 jours )

Aggregate Holdings est une société d'investissement privée luxembourgeoise axée sur les investissements à long terme dans des entreprises opérant dans divers secteurs, notamment l'immobilier, les médias et les technologies.

L'Obligation émise par Aggregate Holdings ( Luxembourg ) , en EUR, avec le code ISIN DE000A28ZT71, paye un coupon de 6.875% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 09/11/2025

Offering Memorandum
Dated 27 November 2020
NOT FOR DISTRIBUTION IN THE UNITED STATES
Aggregate Holdings S.A.
(a limited liability company (société anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg)
as Issuer
EUR 100,000,000 6.875 per cent. Notes due 2025
(to be consolidated and form a single series (Gesamtemission) with the EUR 400,000,000 6.875 per cent. Notes due
2025 issued on 9 November 2020)
Issue Price: 101.5 per cent. plus interest accrued since 9 November 2020
Aggregate Holdings S.A. (the "Issuer" or "Aggregate" and, together with its direct and indirect subsidiaries, the "Group")
will issue EUR 100,000,000 6.875 per cent. fixed rate notes (the "Tranche 3 Notes") on 3 December 2020 (the "Issue
Date"). The Tranche 3 Notes will have identical terms (except for the date of issue and the issue price) as the EUR
400,000,000 6.875 per cent. fixed rate notes (the "Original Notes" and together with the Tranche 3 Notes, the "Notes")
issued on 9 November and 10 November 2020. On the Issue Date, the Tranche 3 Notes will be consolidated with and share
the same ISIN numbers and common codes as the Original Notes and form a single series and be fully fungible with the
Original Notes (Gesamtemission). The Tranche 3 Notes will be issued in bearer form due 2025 with a denomination of
EUR 1,000 each and a minimum subscription amount per investor of EUR 100,000. The Notes will be redeemed at par on
9 November 2025. The Tranche 3 Notes constitute direct, unconditional and unsubordinated obligations of the Issuer. The
Tranche 3 Notes will bear interest from and including 9 November 2020 on their principal amount that will be payable
annually in arrears. The Tranche 3 Notes will be governed by the laws of the Federal Republic of Germany ("Germany").
Investing in the Tranche 3 Notes involves risks. See "Risk Factors" beginning on page 1.
This offering memorandum (the "Offering Memorandum") constitutes a prospectus for purposes of Part IV of the
Luxembourg law on prospectuses for securities dated 16 July 2019 but does not constitute a prospectus within the meaning
of article 6 of, and for the purpose of Regulation (EU) 2017/1129 of the European Parliament and the Council of 14 June
2017, as amended from time to time.
Application has been made to the Luxembourg Stock Exchange in its capacity as market operator of the Euro MTF market
(the "Euro MTF") under the Luxembourg Act relating to prospectuses for securities (loi relative aux prospectus pour
valeurs mobilières) to list the Tranche 3 Notes on the Euro MTF. The Euro MTF is a multilateral trading facility for the
purposes of Directive 2014/65/EU of 15 May 2014 on markets in financial instruments, as amended ("MiFID II").
References in this Offering Memorandum to the Tranche 3 Notes being listed (and all related references) shall mean that
the Notes have been admitted to the official list of the Luxembourg Stock Exchange and have been admitted to trading on
the Euro MTF. The Euro MTF is not a regulated market for the purposes of MiFID II.
The Notes have been assigned the following securities codes: ISIN DE000A28ZT71, Common Code 225297045, WKN
A28ZT7.
The Notes have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended, (the "Securities
Act"). The Notes are being offered to non-U.S. persons outside the United States of America (the "United States" or
"U.S.") by the Managers (as defined below) in accordance with Regulation S under the Securities Act ("Regulation S"),
and may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act.
Managers
DEUTSCHE BANK
SANTANDER CORPORATE & INVESTMENT
BANKING
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RESPONSIBILITY STATEMENT
The Issuer accepts responsibility for the information contained in this Offering Memorandum and declares that, having
taken all reasonable care to ensure that such is the case, the information contained in this Offering Memorandum to the
best of its knowledge is in accordance with the facts and contains no omission likely to affect its import.
This Offering Memorandum should be read and understood in conjunction with any documents incorporated herein by
reference. Any website referred to in this Offering Memorandum is referred to for information purposes only and does not
form part of this Offering Memorandum. This does not apply to websites/links granting access to documents incorporated
by reference into the Offering Memorandum.
The Issuer has confirmed to Deutsche Bank Aktiengesellschaft and Banco Santander, S.A. (the "Managers") that this
Offering Memorandum contains the information which, in accordance with the nature of the Issuer and of the Tranche 3
Notes admitted to trading on the Euro MTF of the Luxembourg Stock Exchange, is necessary to enable investors to make
an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the Issuer and of
the rights attaching to the Tranche 3 Notes; that the information contained herein with respect to the Issuer and the Tranche
3 Notes is accurate in all material respects and is not misleading; that any opinions and intentions expressed herein are
honestly held and based on reasonable assumptions; that there are no other facts, the omission of which, in the context of
the issue and offering of the Tranche 3 Notes, would make any statement, whether fact or opinion, in this Offering
Memorandum misleading in any material respect; and that all reasonable enquiries have been made to ascertain all facts
and to verify the accuracy of all statements contained herein.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This Offering Memorandum contains forward looking statements. Forward looking statements provide the Issuer's current
expectations or forecasts of future events. Forward looking statements include statements about the Issuer's expectations,
beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such
as "anticipate", "believe", "continue", "estimate", "expect", "intend", "may", "on-going", "plan", "potential", "predict",
"project", "will" or similar words or phrases, or the negatives of those words or phrases, may identify forward looking
statements, but the absence of these words does not necessarily mean that a statement is not forward looking. Examples of
forward looking statements in this Offering Memorandum include, but are not limited to, statements regarding the Issuer's
disclosure concerning its operations, cash flows, capital expenditure and financial position.
Forward looking statements appear in a number of places in this Offering Memorandum including, without limitation, in
the "Risk Factors" and "Business of the Group and Principal Markets" sections of this Offering Memorandum.
Investors are cautioned that forward looking statements are not guarantees of future performance. Forward looking
statements may, and often do, differ materially from actual results. Any forward looking statements in this Offering
Memorandum speak only as of the date of this Offering Memorandum, reflect the Issuer's current view with respect to
future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the
Issuer's operations, results of operations, growth strategy and liquidity. Investors should specifically consider the factors
identified in this Offering Memorandum which could cause actual results to differ before making an investment decision.
All of the forward looking statements made in this Offering Memorandum are qualified by these cautionary statements.
The Issuer undertakes no obligation to update or review any forward looking statement, whether as a result of new
information, future developments or otherwise. All subsequent written and oral forward looking statements attributable to
the Issuer or individuals acting on behalf of the Issuer are expressly qualified in their entirety by this paragraph.
Neither the Managers nor any other person mentioned in this Offering Memorandum, other than the Issuer, is responsible
for the information contained in this Offering Memorandum or any other document incorporated herein by reference, and
accordingly, and to the extent permitted by the laws of any relevant jurisdiction, none of these persons accepts any
responsibility for the accuracy and completeness of the information contained in any of these documents or any
responsibility for any acts or omissions of the Issuer or any other person (other than the Managers) in connection with the
Offering Memorandum or the issue and offering of the Tranche 3 Notes.
The Managers will not be responsible for, or for investigating, any matter which is the subject of, any statement,
representation, warranty or covenant of the Issuer contained in this Offering Memorandum or any agreement or document
relating to the Tranche 3 Notes, or for the execution, legality, effectiveness, adequacy, genuineness, validity, enforceability
or admissibility in evidence thereof.
MIFID II PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPS ARE ONLY TARGET MARKET:
Solely for the purposes of the manufacturer's product approval process, the target market assessment in respect of the
Tranche 3 Notes has led to the conclusion that: (i) the target market for the Tranche 3 Notes is eligible counterparties and
professional clients only, each as defined in MiFID II; and (ii) all channels for distribution of the Tranche 3 Notes to eligible
counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the
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Tranche 3 Notes (a "distributor") should take into consideration the manufacturer's target market assessment; however, a
distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Tranche 3
Notes (by either adopting or refining the manufacturers' target market assessment) and determining appropriate distribution
channels. For the avoidance of doubt, the Issuer is not a MiFID regulated entity and does not qualify as a distributor or a
manufacturer under the MiFID II product governance rules.
This Offering Memorandum is distributed only to and directed only at persons who are not classified as a retail client as
defined in point (11) of Article 4(1) of MiFID II or equivalent applicable local regulatory classification.
This Offering Memorandum may not be used for the purposes of, an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make
such offer or solicitation.
In this Offering Memorandum all references to "dollars", "USD", "U.S. dollars", "U.S.$" "United States dollars" or "$"
are to the currency of the United States of America, references to "", "EUR" or "Euro" are to the currency introduced at
the start of the third stage of the European economic and monetary union, and as defined in Article 2 of Council Regulation
(EC) No 974/98 of 3 May 1998 on the introduction of the Euro, as amended.
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TABLE OF CONTENTS
1.
Risk Factors ............................................................................................................................................................ 1
2.
Use of Proceeds .................................................................................................................................................... 21
3.
General Information about the Issuer and the Group ............................................................................................ 22
4.
Historical Financial Information .......................................................................................................................... 25
5.
Pro Forma of Consolidated Financial Information of Aggregate Holdings S.A. .................................................. 30
6.
Business of the Group and Principal Markets ...................................................................................................... 35
7.
Conditions of Issue ............................................................................................................................................... 44
8.
Taxation Warning ................................................................................................................................................. 65
9.
Subscription and Sale of the Tranche 3 Notes ...................................................................................................... 66
10.
General Information / Incorporation by Reference ............................................................................................... 68
11.
Names and Addresses ........................................................................................................................................... 70

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1. RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Tranche 3 Notes.
An investment in the Tranche 3 Notes involves a high degree of risk. Each potential investor should carefully consider the
following risks, together with other information provided in this Offering Memorandum, in deciding whether to invest in
the Tranche 3 Notes. The occurrence of any of the events discussed below could materially adversely affect the Issuer's
business, financial condition or results of operations. If these events occur, the trading prices of the Tranche 3 Notes could
decline, the Issuer may not be able to pay all or part of the interest on or principal of the Tranche 3 Notes, and holders of
the Tranche 3 Notes (the "Holders" and each a "Holder") may lose all or part of their investment. Additional risks not
currently known to the Issuer or that they now deem immaterial may also harm the Issuer and affect the Holders'
investment.
This Offering Memorandum contains "forward looking" statements that involve risks and uncertainties. Actual results may
differ significantly from the results discussed in the forward looking statements. Factors that might cause such differences
include those discussed below and elsewhere in this Offering Memorandum.
1.1
RISKS RELATING TO THE ISSUER AND THE GROUP
1.1.1 Risks related to the Issuer's business activities
The Group bears risks in connection with possible acquisitions and investments. These risks include unexpected
liabilities, greater indebtedness, higher interest expenses, higher compensations and challenges with respect to the
integration of newly acquired businesses and achieving anticipated synergies and economies of scale. Furthermore,
new properties may not develop as favourably as expected.
The Group is active as developer of real estate properties which it keeps as long-term holding in its portfolio ("Build &
Hold" business segment). Core of the Build & Hold business segment is Aggregate's subsidiary Quartier Heidestrasse
GmbH. Quartier Heidestrasse GmbH and its subsidiaries are currently developing Quartier Heidestrasse in Berlin, a
neighbourhood development scheme with a mix of residential and office buildings, commercial use, public streets and
squares, as well as open green spaces. The success of the project mainly depends on the ability of the Group to generate
earnings from rentals. As a result, the performance depends largely on the amount of rental income generated, which in
turn is significantly dependent on the vacancy levels of the units. If the Group is not able to let these properties after
completion of the project at the currently expected level of rent or at all, or should the Group incur an increase in vacancy
levels in the future, this could have an adverse effect on the Group's financial results as a result of their nature of
"investment properties under construction" valued at their anticipated gross development value.
Investments in property also involve other considerable risks. The acquisition of additional real estate needs to be financed,
partially by taking on additional debt with banks or by issuing new shares or debt in the capital markets or by a combination
thereof. If the Group is unable to obtain the necessary capital on reasonable terms or at all, it may be unable to make further
acquisitions to the extent envisaged. Any additional debt incurred in connection with future acquisitions could have a
significant negative impact on the Group's loan-to-value ratio ("LTV-Ratio") and could result in higher interest expenses
for the Group. If Aggregate or its respective Group companies were no longer able to obtain the debt or equity financing
they need to acquire additional land for development, or if they were able to do so only on unfavourable terms, its further
business development and competitiveness could be severely constrained. In addition, acquisitions could result in a breach
of financial covenants.
Furthermore, the properties acquired by the Group may suffer from hidden defects, such as contamination, and may thus
require significant investments. In addition, in the course of the acquisition of companies or residential and other property
portfolios or developable land, specific risks may not be, or might not have been, identified or evaluated correctly. As a
result, legal and economic liability may be, or might have been, overlooked or misjudged. Although sellers typically make
various warranties in purchase agreements that the Group companies enter into in connection with such property
acquisitions, it is possible that these warranties do not cover all risks or that they fail to cover such risks sufficiently.
Additionally, a warranty made by a seller may be unenforceable due to the seller's insolvency or for other reasons. In some
cases, a seller makes no representation or warranty as to the completeness and correctness of the information that is made
available in the context of due diligence, or as to whether such information remains correct during the period between the
conclusion of the due diligence and the closing of the relevant acquisition.
Consequently, in particular in the case of acquisitions of large-volume properties, Aggregate or its Group companies, as
the case may be, could have overestimated earning potential upon development, underestimated the rental and cost risks
and consequently paid a purchase price higher than the portfolio's actual value for the Group. Furthermore, the properties
could be inaccurately appraised by the Group for other reasons, even if they were acquired on the basis of valuation reports
and due diligence reviews. Therefore, neither a particular target return from rentals, nor, if applicable, a certain price upon
resale can be guaranteed with respect to acquired property.
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Moreover, the Group is active as a real estate developer focused on the construction and sale of real estate to third-party
buyers (mainly via forward sales) ("Build and Sell" business segment). The core of this business segment is Aggregate's
stake in VIC Properties S.A. ("VIC"). VIC develops real estate projects in Portugal, focused on large scale development
schemes with a predominant focus on residential projects. Substantial funds of the Group are tied up in various real estate
development projects in Portugal, especially in Lisbon and its surrounding areas, but also targeting pipeline projects in
Porto and the Algarve region, that may not be realised until the relevant project is completed. It is currently expected that
the main development projects Prata Riverside Village and Matinha in Portugal will be completed in 2023 and 2027,
respectively. Any delay in the completion or additional costs in connection with such projects may cause liquidity risks for
the Group and thus Aggregate.
Furthermore, the Group is active in investing in financial real estate assets ("Financial Real Estate Assets" business
segment). On 15 December 2019, Aggregate entered into a call/put option agreement with ADLER Group S.A. (the
"ADLER Group") (formerly ADO Properties S.A.) to sell 50.97% of the shares in Consus Real Estate AG ("Consus"),
representing 69,619,173 shares of Consus. On 29 June 2020, the ADLER Group exercised the call option for the Consus
shares and Aggregate received approximately 22.5% of the voting rights in the ADLER Group as consideration. There is
no assurance that the anticipated benefits of the acquisition of the ADLER Group shares will realize in full or at all. In
particular, the Group may not have been in a position to adequately and sufficiently identify and assess all risks in
connection with the exercise of the call/put option agreement and acquisition of the ADLER Group shares. It is possible
that the Group will carry out further acquisitions and investments in financial real estate assets in the future. Such
transactions involve certain risks. The Group may not be able to realise anticipated synergies, future earnings, transfer of
know-how or other benefits that it intends to achieve from the acquisitions and investments. The Group cannot guarantee
that any acquisition or investments will yield benefits that are sufficient to justify the expenses the Group has incurred.
The occurrence of any of the aforementioned risks could have material adverse effects on the assets, financial position, and
results of operations of the Group and thus Aggregate.
The business success of the Group depends on a small number of projects and inventories and problems with these
inventories could have a disproportionate impact on the business success of the Group and thus Aggregate.
The business success of the Group depends on a small number of large-scale projects and inventories, especially the projects
developed in Berlin (Quartier Heidestraße) and in Portugal by VIC Properties S.A., which account for a substantial portion
of sales. If in addition to the general customer dependency in form of a bulk risk associated with this, there is also the risk
that possible delays or problems in completing these projects, changes in demand in specific geographic markets or a
change of customer preferences could have a disproportionate impact on the business success of the Group.
Aggregate may not be able to acquire real estate properties or participations due to a lack of attractive properties or
participations available for purchase or competition for such acquisitions.
The extent of Aggregate's success is also dependent on the Group's ability to acquire suitable real estate properties or
participations on a continuous basis in economically attractive regions for appropriate prices. Acquisitions can only be
implemented if attractive properties that meet its investment criteria are available for purchase and if the prices for such
properties are reasonable. A lack of attractive acquisition opportunities could drive up prices for the type of properties the
Group seeks to acquire. In addition, whether such properties can be acquired depends on a number of factors over which
the Group has limited or no control. These include, among others, the general economic conditions with corresponding
impacts on the supply and demand situation with respect to new and existing properties, financing opportunities as well as
the costs associated with the development, conversion and refurbishment of properties.
Given the current strong demand for residential real estate in Europe and particularly in Germany, there may be fierce
competition for attractive properties, and acquisition opportunities may be unavailable or available only on unfavourable
terms (i.e., at higher prices and lower yields). Competitors with acquisition strategies similar to the Group may possess
greater financial resources and lower cost of capital than Aggregate and may therefore be able to offer higher prices.
In addition, during the acquisition of real estate properties and participations, unforeseen problems can arise as a result of
substantial economic or legal obstacles. Some transactions may be subject to a number of closing conditions and certain
rights of withdrawal. If conditions precedent set out in a purchase agreement are not fulfilled or if the parties fail to reach
an agreement with respect to, among other things, the loan documentation, such transaction may not occur in the form or
within the timeframe originally anticipated, or at all. In the event Aggregate or its Group companies are unable to complete
an anticipated acquisition, the Group may have to bear any associated transaction costs or compensate seller's losses.
Furthermore, Aggregate relies on access to financial markets in order to refinance its debt liabilities and secure acquisition
financing. Aggregate might consider financing its future growth also through equity capital markets measures. In this
regard, Aggregate may be dependent on the general economic environment and the level of demand in the capital markets
as well as further factors, which may lie outside its control. Any worsening of the economic environment or restrictions in
the financial markets may reduce its ability to refinance its existing or future liabilities or gain access to new financing.
Aggregate's counterparties may not be able to fulfil their obligations under the respective agreements due to a lack of
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liquidity, operational failure, bankruptcy or other reasons. Furthermore, an increase in interest rates could adversely impact
its business by making financing more expensive and might force Aggregate to secure financing under economically
unattractive conditions, which could, in turn, require Aggregate to dispose of properties or participations. A forced sale of
properties or participations in a timely manner may only be possible on unfavourable terms and for a purchase price below
market value.
There is no guarantee that Aggregate and its Group companies will manage the acquisition of new properties effectively.
Any inability to complete anticipated acquisitions or acquire and develop properties could impair its strategy to realize
growth opportunities by increasing its portfolio and to capitalize on economies of scale.
If Aggregate and its Group companies are not able to identify and acquire suitable properties at reasonable prices, this
could have a material adverse effect on business, financial condition and results of operations of Aggregate.
The Group may achieve lower revenue from its business than estimated.
Estimating the future value of a real estate property is inherently subjective due to the individual nature of each real estate
property and is heavily affected by broader market conditions beyond the control of the Group. Factors including changes
in regulatory requirements and applicable laws (including building, zoning and environmental regulations and taxation),
transport and infrastructure policies, economic conditions, the condition of the financial markets, the financial condition of
potential customers, applicable tax laws and interest and inflation rate fluctuations contribute to the uncertainty and
volatility of project estimates, including valuations.
The value of the Group's real estate development projects is estimated only and is ascertained on the basis of assumptions
(including assumptions regarding factors such as demand for residential or commercial real estate properties and average
sales prices of residential real estate properties). These assumptions can turn out to be incorrect. There can be no assurance
that the value of the Group's real estate properties reflects the future sales prices. Any failure to sell the estimated number
of residential or commercial real estate properties or selling at prices lower than expected may result in a lower revenue
than estimated.
In addition, the Group's ability to increase its income from property development is dependent on its ability to increase
occupancy and rent levels of the developed residential real estate properties before such properties are sold. Consequently,
the loss of current tenants could lead to a reduction or loss in rental income if the relevant member of the Group is not able
to find new tenants in a timely manner.
Furthermore, if relationships with key tenants were to deteriorate, if tenants fail to fulfil their rental payment obligations,
if tenants were to reduce the amount of space they lease from the Group or terminate their rental agreements, the Group
may suffer a decline in rental income, especially if the Group is unable to maintain previous rental rates with the new
tenants.
Any deviation from the estimated value to the realised value, including as a result of inaccurate valuations, could have a
material adverse effect on the business, financial condition and results of operations of the Group.
The Group is exposed to certain risks in connection with construction projects, including construction defects and
delays, availability of contractors, cost-overruns as well as health, safety and environmental risks.
With respect to the construction of development projects, Aggregate or any member of the Group is exposed to various
risks relating to defective construction work or the use or installation of defective construction materials by third-party
suppliers or contractors. The warranty, guarantee or indemnity protection set forth in the contracts with such third-party
suppliers and contractors, and the arrangements with insurance providers to insure against certain risks, may prove to be
insufficient or may not adequately protect Aggregate or any member of the Group against relevant risks. Furthermore, the
Group may not be able to enforce claims in the respective amount, or at all, due to the third-party contractor's or supplier's
insolvency or for other reasons. Significant liabilities may not be identified or may only come to light after the expiry of
warranty, guarantee or indemnity claims. Any claims relating to defects arising from or related to one of the development
projects of the Group may give rise to contractual or other liabilities, which can extend, depending on the relevant
contractual or statutory provisions, for five years following completion of the development project and may not be covered
by claims against any contractors or suppliers of the Group.
Moreover, the Group's ability to successfully complete development projects on time, at the anticipated quality or at all,
depends on several factors. Construction work may involve higher costs than originally planned, and unforeseen additional
expenses may be incurred leading to a deteriorating financial situation of the Group. For example, the Group may fail to
meet standards and/or deadlines agreed with contractors and service providers and there can be no assurance that the Group
will be able to hire qualified and reliable contractors. Contractors and service providers carrying out construction work
may be adversely affected by economic downturns, insolvencies or any other risks inherent to the provision of construction
services. These risks include damages caused by severe weather conditions (e.g., fires, floods or natural disasters) and
construction-related delays due to personnel shortages, strikes, building site safety, governmental permits or restrictions on
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construction activity, shortage of or inability to source building materials and transportation issues, any of which may be
influenced by the respective parties' reliance on third parties. Among others, any of the aforementioned risks may result in
significant cost overruns and project delays. For example, in connection with the ongoing Coronavirus pandemic, national,
regional or local authorities have mandated social distancing measures which resulted in decreased activity on some of the
Group's construction sites. Such restrictions, or a complete halt of construction activity may be mandated again in the
future. Furthermore, the Group is exposed to cost increases in connection with services of contractors, service providers
and sub-contractors. Any cost increases could adversely affect the ability of the Group to earn the projected yields related
to the development projects.
There are uncertainties regarding whether, when and under what constraints and/or subsidiary conditions approval for the
projects is granted under public construction law, i.e. Aggregate partly relies on the individual authorities exercising
discretion. In addition, disputes with residents and neighbours may significantly delay or negatively influence the granting
of approvals. These circumstances may mean that planned development and construction measures cannot be executed for
the price assumed, within the timeline planned, or not at all.
Developing real estate entails certain health, safety, and environmental ("HSE") related risks. A significant HSE incident
at one of the development projects of the Group or a general deterioration in the Group's HSE standards could put
employees, contractors or the general public at risk of injury or death and could lead to litigation, significant penalties or
damage to the Group's reputation. Aggregate or any member of the Group may be liable for the costs of removal,
investigation or remediation of hazardous or toxic substances (including asbestos) located on, under or in a property
currently or formerly owned by the Group, whether or not Aggregate or any member of the Group caused or knew of it.
Furthermore, the Group may also be deemed to be responsible for latent or historic risks from unknown contamination, or
may incur greater liability or costs than originally anticipated. The costs of remediation, investigation or defending against
claims can be substantial, and they may not be covered by warranties and indemnities from the seller of the affected land
plot or property or by any insurance policies of the Group, or may prove unenforceable. Any failure in HSE performance,
including any delay in responding to changes in HSE regulations, may result in penalties for non-compliance with relevant
regulatory requirements. Monitoring and ensuring HSE best practices may become increasingly expensive for the Group
in the future if additional HSE requirements were to come into effect.
Aggregate or any member of the Group is also exposed to a liability risk arising in connection with non-compliance with
or introduction of new building codes or environmental regulations. It is also possible that landlord responsibilities could
be further expanded with respect to fire protection and environmental protections, which could require additional
development, refurbishment, maintenance and modernization measures or result in lower proceeds from the sale of real
estate properties. The project cost of such measures is based on the assumption that the required permits are issued promptly
and in consistence with Aggregate's plans.
The occurrence of any of the aforementioned risks could have material adverse effects on the assets, financial position, and
results of operations of the Group and thus Aggregate.
Land plots and real estate properties can be illiquid assets and could significantly impede the ability of the Group to
respond to adverse changes in the real estate or financial markets.
Land plots and real estate properties can be relatively illiquid assets because they may not be easily sold and converted into
cash when markets deteriorate. The Group may be required to sell entire land plots or properties in certain circumstances,
including due to changes in development plans, failure to obtain required building permits, the decision not to proceed with
the development, changes in economic or property market conditions, negative political developments affecting the
residential real estate or commercial letting market, including any expropriation or nationalization of real estate property,
rental caps or financial distress. The illiquidity of real estate properties may affect the ability of the Group to dispose of or
liquidate parts of its development portfolio in a timely fashion and/or at satisfactory prices when required or desirable, and
the Group may incur additional costs until it is able to sell such land plots or properties. This could have a material adverse
effect on the business, financial condition and results of operations of the Group.
Future offerings of debt or equity securities by the ADLER Group may adversely affect the market price of the ADLER
GROUP shares held by Aggregate and future capitalisation measures could lead to a substantial dilution of Aggregate's
interests in the ADLER Group and ultimately the value of the asset.
On 15 December 2019, Aggregate entered into a call/put option agreement with ADLER Group S.A. (the "ADLER
Group") (formerly ADO Properties S.A.) to sell 50.97% of the shares in Consus Real Estate AG ("Consus"), representing
69,619,173 shares of Consus. On 29 June 2020, the ADLER Group exercised the call option for the Consus shares and
Aggregate received approximately 22.5% of the voting rights in the ADLER Group as consideration. On 2 July 2020, ADO
Properties (renamed to ADLER Group S.A.) announced a fully underwritten rights issue of EUR 450 million (the "ADO
Capital Increase") which was successfully completed by 21 July 2020. Aggregate subscribed to additional 6,932,909
shares, which brought its total holdings to 23,571,891 ADLER Group shares. Therefore, following the ADO Capital
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Increase a total of 104,785,930 ADLER Group shares are outstanding with Aggregate's stake maintained at approximately
22.5% post completed rights issue.
Aggregate bears the risk that ADLER Group S.A. (the "ADLER Group") (formerly ADO Properties S.A.) may issue new
shares in the future resulting in a declining market price of the ADLER Group shares and a dilution of its holdings in
ADLER Group. The occurrence of any of the aforementioned risks could have material adverse effects on the assets and
financial position of the Group and thus Aggregate.
Aggregate has a small number of employees in central functions and in senior management positions overseeing its
business. Aggregate is dependent on recruiting and retaining qualified staff and employees in key positions. Any
inability to retain or replace key personnel may be a challenge for Aggregate in the future.
Aggregate only has a small number of senior management executives responsible for managing its core business. The
Group's success depends significantly on the performance and expertise of its management executives and the qualified
employees in key positions, in particular, the management board members as well as other executives. It will be important
for Aggregate to hire additional qualified employees to the extent that an expansion exceeds its available resources or to
replace departed employees. Any unexpected loss of any of the key employees, also in connection with changes of internal
structures at Aggregate, could have a detrimental effect. Any inability to recruit new highly-qualified management
executives could impair the Group's growth and make it difficult for the Group to manage its business operations
effectively.
The occurrence of any of the aforementioned risks could have material adverse effects on the assets, financial position, and
results of operations of the Group and thus Aggregate.
Aggregate's risk management organisation could be insufficient or might not be updated in line with Aggregate's
growth. Thus, risks could arise with respect to deviations of Aggregate's actual business performance from its business
planning.
The Group's risk management and monitoring systems may not be adequate to support and effectively monitor Aggregate's
business operations and prevent or detect inadequate practices, fraud and violations of law by Aggregate, other members
of the Group, employees or third parties acting on behalf of the Group. Failure or alleged failure to comply with applicable
law and regulation may result in legal proceedings, penalties, unfavourable media reporting, damage to the Group's
reputation and other detrimental consequences. This may in turn have material adverse effects on the assets, financial
position, and results of operations of the Group and thus Aggregate.
In addition, the data underlying Aggregate's business planning, especially revenue, income, and expenses, is largely based
on forward-looking projections and estimates that take into account all of the insights gained up to the time the planning
was prepared, historical figures, and the expectations of Aggregate's management board at the time the planning was
prepared. Whether the assumptions and estimates in the planning will actually materialize is uncertain. There is a risk that
the earnings and liquidity of the Issuer may not develop according to plan due to negative deviations from the earnings and
expense expectations in the planning. Moreover, there is a risk that, due to planning deviations, the Issuer's liquidity
situation may not permit the Issuer to make interest and principal payments due under various financing agreements,
including the Notes, at the relevant due date either in whole or in part.
If the Group were to fail to suitably develop further its internal organisational, information, risk monitoring, and risk
management structures, align these with the planned further growth of Aggregate and adapt them to a possibly changing
environment for business operations in order to identify, assess, monitor, and manage potential risks as early as possible,
unfavourable business or administrative developments could occur and incorrect decisions could be made that could have
material adverse effects on Aggregate.
The occurrence of any of the aforementioned risks could have material adverse effects on the assets, financial position, and
results of operations of the Group and thus Aggregate.
Aggregate could suffer material losses from damage that is not covered by insurance, or that exceeds its insurance
coverage.
To cover damage that it or third parties might incur as a consequence of its business operations, Aggregate has taken out
insurance contracts. However, insurance coverage is not unlimited, but subject to liability limitations and liability
exclusions both in terms of the amount and with respect to the individual claim. Consequently, Aggregate could incur
damage not covered by its insurance or exceeding coverage limits. In addition, Aggregate could fail to obtain sufficient
insurance protection in the future or such coverage may only be available at significantly higher premiums. In the event of
a large number of claims or any major loss, insurance contracts could be terminated by the respective insurance company,
insurance premiums could be increased or insurance terms could become less favourable in any other respect. In addition,
insurance companies could become insolvent, which may have an adverse effect on the value of the insurance contracts
entered into by Aggregate with such insurance companies.
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The occurrence of any of the aforementioned risks could have material adverse effects on the assets, financial position, and
results of operations of the Group and thus Aggregate.
The current IT-systems and protection measures with regard to sensitive and confidential information of the Group
could be prone to faults, insufficiently secure or not fully functional.
The Group is dependent on having constantly accessible and functional information technology (IT) systems in order to
carry out its business. In addition sensitive and confidential information, especially customer information, must be
protected at all times against unauthorised access by third parties. The current systems and protection measures could be
prone to faults, insufficiently secure or not fully functional. Any interruptions, failures, manipulation or damage to these
information technology systems, including as a result of the outsourcing of property and facility management functions as
well as Aggregate's IT systems, could lead to delays or interruptions in Aggregate's business processes. A range of factors
beyond Aggregate's control, such as telecommunication problems, software errors, inadequate capacity at IT centres, fire,
power outages, attacks by third parties, computer viruses and the delayed or failed implementation of new computer
systems, could interfere with the availability of its IT systems. Any material disruption or slowdown of Aggregate's systems
could cause information to be lost. Aggregate's existing safety systems, data backup, access protection, user management
and IT emergency planning may not be sufficient to prevent information loss or disruptions to its IT systems. In addition,
if changes in technology cause Aggregate's IT systems to become obsolete, or if Aggregate's IT systems are inadequate to
handle its growth, its reputation may be damaged and Aggregate may incur additional unplanned expenses. Future
technological developments may require Aggregate to spend substantial funds to prevent and repair malfunctions of
Aggregate's IT systems. There can be no assurance that any of Aggregate's detected malfunctions will not be repetitive in
the future despite the installation of additional security measures. Furthermore, the integration of IT systems of newly
acquired real estate companies may cause the incurrence of additional costs and, simultaneously, lead to malfunctions of
Aggregate's IT systems, which, in turn, may disrupt its real estate activities in multiple ways.
The occurrence of any of the aforementioned risks could have adverse effects on the assets, financial position, and results
of operations of the Group and thus Aggregate.
Infringements of the General Data Protection Regulation and/or failures to safeguard confidential data could expose
Aggregate to significant regulatory fines or penalties, liability and/or reputational damage.
The Regulation (EU) 2016/679 ("General Data Protection Regulation" or "GDPR") came into force on 25 May 2018.
The General Data Protection Regulation standardises the rules for the processing of personal data by private companies,
public companies and public authorities. As well as additional amendments to the rules, the regulation also increased the
possible fines for data protection violations. The maximum fine for particularly serious violations is now EUR 20 million
or 4% of global revenue in the previous financial year, depending on which figure is higher. If Aggregate or a subcontractor
engaged by Aggregate were to breach requirements stipulated by GDPR, this could also have a negative impact on its
business performance. The realisation of this risk could negatively impact Aggregate's reputation and its net assets,
financial position and results of operations.
1.1.2 Risks related to the real estate market
Aggregate is dependent on the development of the real estate market predominantly in Germany, in particular in Berlin,
but also with an interest in the broader DACH region (Germany, Austria and Switzerland) and Portugal. The real estate
market, in turn, depends on the performance of the overall economy and on the demand for real estate and rental space.
Unfavourable macroeconomic developments could adversely affect Aggregate's business and may also result in
restricted access to debt and equity financing and potential payment defaults of Aggregate's business partners.
Aggregate's core business is in real estate investments. The Group focuses on acquiring, developing, managing and selling
residential and commercial real estate predominantly in Germany, in particular in Berlin, but also with an interest in the
broader DACH region (Germany, Austria and Switzerland) and Portugal. The Group's and thus Aggregate's business
success is therefore especially dependent on the performance of the real estate markets it operates in, the demand for
properties, including rented properties, in Germany and in particular in Berlin as well as Portugal, in particular in Lisbon,
Porto and the Algarve region and the level of achievable rents, the expenses necessary to generate the rental income, as
well as the achievable purchase and sale prices and market values of properties. The real estate market, in turn, is dependent
in particular on the performance of the overall economy, political developments, including changes in legislation, and the
demand for real estate in the respective country. Key factors affecting macroeconomic developments in Germany and
Portugal include the state of the German and Portuguese economies, as well as European and global economy, the
development of commodity prices and inflation rates, the extent of national indebtedness, and interest rates. The current
worldwide economic downturn, a rise in the inflation rate, deflationary tendencies or an upturn in interest rates could
adversely affect macroeconomic performance. Moreover, the last recession in the Eurozone, particularly the need for some
governments to cut back on spending to retain credibility in the financial markets, has impacted economic developments
in Germany and to a more significant degree Portugal and an increasing level of national indebtedness could have
consequences, including reduced economic output, a higher inflation rate, rising taxes, and lower income, thus reducing
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