Austrian shareholders shun Starwood offer for listed companies

Shareholders of listed real estate businesses CA Immo and Immofinanz have rejected approaches from Starwood Capital to take stakes in both companies, taking the view that a more lucrative deal will be available elsewhere.

Only 0.16% of CA owners and 0.21% of Immofinanz investors reputedly tendered shares during the bid period, with Starwood looking for 26% and 5% stakes respectively. The real estate investor formally launched bids for the stakes in April after making its intentions public a month earlier.

CA Immo’s €4.3 billion portfolio comprises offices and shops in Austria, Germany and eastern Europe, while Immofinanz’s portfolio is comparable in value and geographical focus, particularly after selling off their burdensome Russian interests last year.

A third listed property firm, S Immo, is also included in some consolidation scenarios. Immofinanz already holds 29% in S Immo, which return has a 12% stake in Immofinanz and a 6% stake in CA Immo.

While CA Immo had welcomed Starwood’s interest, CA Immo had dismissed the offer as too low and, after the Starwood bid, put its 26% stake in CA Immo on the block, inviting investors to express interest in bidding for the stake.

"There were a couple of reasons why we turned down Starwood’s offer,’ Christoph Thurnberger, head of capital markets at CA Immo, told REFIRE. ‘It was partly because we thought the price was too low – the offer reflected the stock price but nothing more than that –so it didn’t represent a unique opportunity to sell. In addition, Immofinanz is our core shareholder, with a 26% stake, and they have announced their intention to sell that stake, so we thought any sale on our part should be something for the new owner.’

Immofinanz and CA Immo first toyed with the idea of a merger back in 2015 but talks broke down acrimoniously in the same year before being reignited in 2016. 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.

Starwood, for its part, said in a statement in March that it believed that‘the substantial capital resources and experience we can contribute as a strategic shareholder of CA Immo and Immofinanz could provide significant value’.

CA Immo’s rejection marks the second setback for Starwood this month: It was outbid by Germany’s biggest residential landlord, Vonovia, for Swedish property group Victoria Park.

Also, CA Immo has an ambitious development pipline, at €1.1bn of properties due for completion by the end of 2020, of which €1bn is in Germany, including Frankfurt’s Tower 1, a €350m office and hotel scheme in Frankfurt’s Europaviertel.