Mayr Melnhof - Karton AG
Oliver Schumy - Immofinanz
Both parties conceded at the time that the merger was fraught with obstacles and talks floundered. Initially, the merger was expected to create an entity with ‘substantial synergies’, according to Immofinanz's CEO Oliver Schumy, generating annual cost savings of around €33m.
Austrian listed property group Immofinanz has finally closed the sale of its Russian retail portfolio to Russia's Fort Group for around €900m, completing its exit from the russian market, as has long been its stated corporate strategy. The move has been seen as a key condition to enabling it to merge with fellow-listed Austrian group CA Immo.
The poor state of the Russian market, however, had led to Immofinanz delaying the sale of its Russian assets pending a better market environment. The sale to Fort Group will be booked in this year's accounts for Immofinanz. Russia's state-controlled lender Sberbank provided the financing to Fort Group for the acquisition.
According to Immofinanz CEO Oliver Schumy, "The market climate in Russia has been difficult for many years and has had a substantial negative effect on Immofinanz. As previously announced, we have finalised the sale of the Russian shopping centers before the end of 2017 and closed the transaction in the shortest possible time. The Immofinanz portfolio with its office and retail asset classes is now clearly focused on the stable Western European markets of Germany and Austria and on the promising growth markets in CEE.“
"Over the past two years we have eliminated a number of risks – for example through the settlement of historical lawsuits filed by investors and the reduction of risks in our portfolio. However, the most important milestone was the sale of our retail portfolio in Moscow," said Schumy.
Immofinanz COO added, "We repositioned the five Moscow shopping centers to reflect the changed market environment in Russia. That set the stage for the start of a multi-stage structured sales process which has now ended with the transfer of the properties to the buyer."
The sale of the retail portfolio in Moscow generates immediate net cash flows for Immofinanz (after the repayment of existing debt financing) of RUB 5.0bn (around €72m). The purchase agreement also includes an additional guaranteed payment of €14.5m in January 2022 and an earn-out of up to RUB 9.0bn (around €129.6m) based on the revenues from the shopping centres in 2021, which is also due in 2022.
It now remains to be seen how quickly the merger of Immofinanz and CA Immo will go ahead. Earlier this month CA Immo said that CEO Frank Nickel is stepping down from his position on health grounds, to be replaced by industry veteran Andreas Quint, ex-Germany head of JLL and more recently head of corporate finance at BNP Paribas Real Estate. He joins CFO Hans Volkert Volckens in making up the board of CA Immo.
