Conwert renews focus on residential, plans more commercial RE sales
The Vienna-listed residential and commercial property investor Conwert Immobilien Invest said it surpassed its sales target for non-core assets during 2015, and expects a further €300-350m of disposals this year. In a statement the company said it sold €234m of non-core properties last year, well above its initial target of €150-200m of disposals.
According to Wolfgang Beck, Conwert's CEO, "Disposals in the commercial sector and portfolio streamlining in the residential sector are an important part of our strategy. We are focusing on the residential market in Germany and Austria, which has proven to hold the greatest growth potential for us and we want to continue to invest here."
Disposals include the entire portfolio in the Czech Republic for around €40m, and the sale of other non-core properties for more than €190m, at what the firm calls "a slightly postive sales margin". The management team is planning further reductions in the non-core holdings in 2016, which is expected to generate sales proceeds of €300m to €350m.
Beck said this will be re-invested in new residential holding, where and if good opportunities arise – otherwise it will be used to pay down debt. "Of course paying down debt brings with it savings of 2.5% in interest charges – but an investment in new apartments brings us a yield of 5% to 6%", he said.
Despite several false alarms, no major acquisitions were actually carried out last year, although the company had originally planned to buy German residential landlord BGP and its 16,500-unit portfolio. But Conwert's board decided on 6 August 2015 that the proposed transaction was not in the 'best interests' of Conwert and its shareholders.
Conwert was itself, however, uwittingly at the centre of the ongoing consolidation wave that swept the listed residential property sector in Germany last year. In April 2015 Conwert's shareholders rejected a €1.2b takeover offer from Deutsche Wohnen, Germany's second larges residential investor, itself currently fighting off a bid from industry heavyweight Vonovia.
On 20 August, two weeks after the decision to drop the acquisition of BGP, Adler Real Estate, another German listed residential landlord, bought a shareholding of almost 25% in Conwert from British-Israeli businessman Teddy Sagi, a share which has since fallen to 23.5%.