CA Immo on efficiency drive, plans sale of Frankfurt tower

It almost feels like REFIRE has checked in at the reception of Frankfurt’s largest office building, Tower 185 at the entrance to the Europaviertel district, so often in the last six months for one meeting or another that we almost expect to be waved through without scrutiny to the bank of elevators behind the barricades – but this of course has not yet been the case. Nonetheless, we now feel we know the building well. The building, completed only last year, is the flagship property of listed Austrian group CA Immo and its German project development subsidiary Vivico.

At its recent press conference in Vienna, CA Immo said it has “several indicative offers” for a part-share in the property, which it had previously said it wants to sell in the course of this year. The property is valued at €457m in its books, and a sale of 75% of the asset is envisaged in the 2012 books – which would make it one of the biggest Frankfurt property deals of the year. CBRE is marketing the sale of the 100,000 sqm nearly-fully-let property, which includes among its tenants PriceWaterhouseCoopers and law firm Mayer Brown.

CA Immo was following up on last month’s statement that it plans to radically reduce its holding and personnel in Germany to pay down its heavy debt burden – the company currently has an equity ratio of only 31%. German asset sales of about €250m are planned for this year, while it needs to honour €200m of commitments in ongoing developments – down on the original €300m planned.

In 2012, CA Immo saw group rental income rise 5.8% to €281m, of which half came from eastern Europe. Major asset sales last year, which included building land in Germany and the company’s 50% stake in the Warsaw Financial Centre, raised €235.8m for net proceeds of €37.5m.

In its full-year report, CA Immo said it had €5.3bn in property assets at end-2012, nearly half by value in Germany. “2012 proved a strong operating year for us, even if the results are not supported by revaluation gains," said CEO Bruno Ettenauer. "We have improved our earnings quality and achieved a clearly positive consolidated net income. As a result, we will again be able to pay a dividend to our shareholders.”

The dividend proposed is €0.38 per share, or around 2% of net asset value, given as €19.27 per share at year-end. (The shares have recently been trading at just below €11.00, a hefty discount to NAV and a source of frustration for Ettenauer, as reflected in several recent statements.)

Ettenauer commented that the economic outlook for 2013 for CA Immo was difficult, and difficult to calculate. While expecting good rental performance for the year, additional rental revenue from completions will not fully compensate for lowered rental income from sales, he said. He added, “Measures introduced last year to cut costs by streamlining staff and material costs will start having a positive effect halfway through this year.”