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Immofinanz to leave Russian market

Rafał Ostrowski 08 August 2016

Rafał Ostrowski


+48 22 356 25 11

Rafał Ostrowski has over 17 years’ experience as a journalist. Before joining ‘Eurobuild CEE’ five years ago, he wrote for Wydawnictwo Murator and Shopping Centre Magazine, as well as for retailnet.pl. He has also written for many newspapers and magazines as a freelancer and prepared photo-reportages. Rafał graduated from the University of Warsaw in philosophy. He also completed postgraduate studies in text editing. For ‘Eurobuild CEE’ he covers most real estate sectors, including logistics, construction, office, residential and retail. He is also in charge of the film direction for Eurobuild TV.

RUSSIA Immofinanz is about to sell its EUR 1.1 bln portfolio of shopping centres in Moscow. “Since the Russian properties have distinct market characteristics and a different risk profile than the remainder of the portfolio, Immofinanz plans either to sell or spin off the Moscow shopping centres,” the company stated in its recent 2015/2016 annual report.

The intention to divest the Russian portfolio was first revealed by Immofinanz last year. Furthermore, according to SRC Research, it is also considered to be one of the preconditions for the merger of Immofinanz with CA Immo, which both companies are heading towards. The researchers at the German consultancy firm predict that the sale is to happen by the end of 2016.

Dmitry Mints, a board member of Russia’s O1 Group, told Reuters in June that the company would consider buying Immofinanz’s Russian shopping centres, when the sale begins. He also added that he did not expect this launch to happen before Immofinanz had bought a 26 pct stake in CA Immo from the O1 Group. Since the latter had in fact happened earlier this month, the way for the sale might already have been paved.

The 278,633 sqm portfolio comprises three Golden Babylon centres (including the giant Golden Babylon Rostokino with 400 stores and 168,000 sqm of leasable space), the 56,000 sqm Goodzone mall, the 21,000 sqm Fifth Avenue, as well as some land for future development. The centres are currently 81.9 pct occupied. With these properties valued at app. 1.11 bln, Imofinanz’s Russian investments currently have the largest (23.8 proc) share in the company’s standing investment portfolio, followed by assets in Austria (1.1 bln or 23.6 pct), Romania (640 mln or 13.7 pct) and Poland 588 mln (12.6 pct.).

In the 2015/2016 financial year rental income from the Russian portfolio amounted to EUR 82.2 mln, down EUR 54.1 mln from 2014/2015. Immofinanz also announced that it had offered rent reductions to tenants because rubel depreciacion had made it difficult for tenants to cope with USD denominated rents. The company also revaluated its Russian portfolio in the same report from app EUR 1.54 bln (in 2014/2015) to just over 1.1 bln, down EUR 421.9 mln.

Commenting recently on the EUR 390.4 mln loss for the 2015/16 financial year, Oliver Schumy, the CEO of Immofinanz, said: “The past financial year was influenced by numerous events and decisions to set the course for Immofinanz’s transformation into a leading European real estate company, but it has also reflected the tense political and economic situation in Russia. After the very successful spin-off of Buwog and the sale of our logistics portfolio, our concentration on the office and retail segments was the next step required for future growth”.

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