EUROPE Immofinanz has entered into an agreement to take over another Austrian property company. It has acquired app. 26 pct of the share capital and voting rights of CA Immobilien Anlagen from O1 Group Limited. The transaction includes 25,690,163 bearer shares and four registered shares, each of which entitles its holder to delegate one member to CA Immo’s supervisory board.
The closing of the acquisition is subject to merger control clearance as well as the approval of the Immofinanz supervisory board and CA Immo’s management board for the transfer of the registered shares. It is expected to take place in summer 2016. Immofinanz has proposed that the acquisition of the CA Immo stake is the first step towards a planned full combination of Immofinanz and CA Immo by way of a statutory merger. Prior to the envisaged merger, Immofinanz is planning to demerge or sell its asset portfolio on the Russian market, which is characterised by different market dynamics and a higher risk profile.
Russian burden
“With the acquisition of the stake in CA Immo and the decision to dispose of our Russian portfolio we have now created the basis for this merger. The combined company will be a leading real estate company in Central and Eastern Europe. The portfolios of both companies are very complementary and we expect significant synergies from the transaction,” said Oliver Schumy, the CEO of Immofinanz. For the first three quarters of its FY 2015/16 Immofinanz posted a net loss of EUR 146.1 mln, compared to EUR 123 mln a year earlier. Results for the first three quarters of 2015/16 continued to reflect the tense political and economic situation in Russia, according to Immofinanz. The decline was caused primarily by app. EUR 400 mln in write-downs on the Russian portfolio and by a decrease in rental income to EUR 238.3 mln, down from EUR 313.5 mln in Q1–3 2014/15, that resulted from temporary rent reductions in Moscow and the planned sale of properties. “This situation is reflected in the reduced revenues from leases and write-downs. The significant deterioration of the overall situation in Russia, the EU sanctions against Russia in the summer and the outlook for the Russian economy, point to it remaining in recession in 2016,” explained Oliver Schumy.
Romanian boost
At the same time, like-for-like rental income increased slightly, by 1.5 pct, compared to the previous quarter, to EUR 73.9 mln. This surge was driven mainly by an increase in leases in Romanian shopping centres. Adjusted income from property rentals in Russia remained stable at EUR 19.8 mln in the third quarter (EUR 19.6 mln in Q2), while the weaker ruble exchange rate was offset by an increase in turnover from the Christmas season. In Russia rental income amounted to EUR 63.1 mln in the first three quarters of 2015/16 (compared to EUR 124.2 mln a year before). In the office segment, new leases for about 150,000 sqm of space were signed, along with app. 150,000 sqm in renewals. In the retail segment, Immofinanz signed 65,900 sqm new leases and 81,000 sqm renewals. The overall commercialisation level across Immofinanz properties currently stands at 83.2 pct (92.4 pct in retail, 75.2 pct in office). “In recent months we have implemented a series of measures aimed at significantly improving occupancy level in our properties, especially in the office segment. The first effects of these actions are already noticeable,” said Oliver Schumy.
... and Polish growth
In Poland after the first three quarters of FY 2015/16, Immofinanz’s rental income increased to EUR 28.1 mln (compared to EUR 17.6 mln a year before), which accounts for 11.8 pct of the company’s total rental income. Its Polish portfolio makes up 13.8 pct of its total real estate portfolio. and comprises 36 buildings, 24 of which are operational, ten remain under construction and two are in the pipeline. The estimated value of the assets is EUR 802.9 mln (existing buildings valued at EUR 550.5 mln, ongoing projects at EUR 245.6 mln).
