Immofinanz to fatten BUWOG calf from company resources
Vienna-listed Immofinanz AG has been on a determined mission to fatten up its BUWOG residential housing subsidiary with new German housing, prior to its planned flotation on the German stock market next year, or a possible spin-off, while the appetite for exposure to the sector remains strong.
The company has been on a buying spree for several months, and earlier this month entered into negotiations with with Solaia RE S.a.r.l. Group, a joint venture of Italian real estate management company Prelios (formerly Pirelli Real Estate) and an investment fund managed by Deutsche Asset & Wealth Management (formerly RREEF). The discussions centre on the acquisition of nearly 18,000 housing units in northern Germany, a portfolio valued at about €942m. “We expect an outcome to our negotiations by the end of the year”, the company said in a statement.
The portfolio is the DGAG Wohnimmobilien GmbH stock, which the then Pirelli Real Estate bought (at the time it had 22,000 units) for about €1.4bn, before bringing Deutsche Bank property fund subsidiary RREEF in as a co-owner. The portfolio consists of apartments in cities such as Hamburg and Lübeck.
The current valuation in Prelios’s books shows the portfolio has €683m in debt, which is due to mature at the end of this year, while the portfolio had only a 2.2% vacancy rate. Prelios has been implementing a new strategy to divest its real estate holdings in favour of becoming a property servicer.
Immofinanz CEO Eduard Zehetner has been taking a feisty approach to media questioning about his plans for the IPO or spin-off, or how the latest acquisition plans could be financed. Zehetner said Immofinanz would finance the proposed Solaia deal with cash and debt, and he rejected the option of a capital increase. “A capital increase would be dilutive, and we will not do this”, he stated last week, hinting that the company had a contingency plan if the Solaia deal failed to materialise.
Immofinanz currently has 8,430 German housing units and has said it aims to increase that number to at least 15,000-20,000 before the spin-off or Frankfurt IPO of BUWOG. This year the company closed on six residential deals, most recently in Berlin (1,185 units), Kiel (600 units) and Kassel (315 units). The total BUWOG investment in Germany this year has been €271m in 6,073 residential units. Berlin with 5,447 apartments and Kassel with 1,500 now make up the bulk of BUWOG’s German holdings.
At end-July the company had a portfolio of residential and commercial property worth about €10bn, and had cash and cash equivalents of €642m. In Austria, subsidiary BUWOG owns and manages 27,000 residential units.