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.
Listed Austrian property group Immofinanz announced last month a major shift in its strategy in a bid to refocus its business after a turbulent period which saw its share price savaged, its Russian business battered by economic sanctions and the arrival of a new chief executive.
The strategy shift involves Immofinanz exiting the logistics sector to concentrate on office and retail investment, and the group refocusing its efforts on Germany, Poland, and its home market of Austria, while reducing its exposure to Russia.
About 8% of Immofinanz's total assets are logistics assets. The company says that its principal competitors are all nearly ten times as big, and it can no longer compete to be a market leader in its core markets. The rest of Immofinanz's asset are 48.8% retail and 43.7% office property assets. Other non-core holdings such as its City-Box self-storage business in the Netherlands and Viennese hotels and residential assets have all since been sold.
Immofinanz remains the largest listed commercial real estate company active in central and eastern Europe, with about 470 assets valued at nearly €7bn under management. The company has had a lot of trouble with its Moscow shopping centres which have been badly hit by Russia's economic difficulties, leading to demands for rent concessions from irate tenants. In April Immofinanz warded off a partial takeover bid from fellow-listed Austrian company CA Immo and its dominant Russian shareholder O1 Group.
In a statement, the company said that talks with interested parties for its logistics business are already in progress. The business division comprises 36 standing investments with about 1m sqm of lettable space, as well as various development projects in western and eastern Europe. Most properties are located in Germany, while others are situated in Poland, Hungary, Slovakia, Romania and Russia.
The company added, “The Executive Board has also informed the Supervisory Board of measures that are planned to restore the company’s structural capa- bility to pay dividends as quickly as possible and thereby support a sustainable dividend policy. Several options are currently being examined. The goal is to simplify the corporate structure, on the one hand, and to safeguard the gen- eration of distributable balance sheet profit, on the other hand.”
New CEO Oliver Schumy gave his own take on the disposal of the logistics business, saying it was a good time to sell because of a “heightened interest by investors in logistics real estate” which the company could take advantage of, as the increased demand “is reflected in attractive price levels”.
Immofinanz also said that it was in negotiations with holders of a convertible bond for €375m in 49% residential subsidiary Buwog to either pay off the bondholders or allow them to trade in the bonds for shares in the listed Buwog. This is expected to be resolved in a meeting on September 18th.
A note from analysts at Baader-Helvea Research suggested that Immofinanz is likely to sell off a further packet of its minority holdings in Buwog, leading to a probable increase in Buwog's free float and, as Immofinanz described it, "a further simplification of our capital structure and a reduction in our liabilities". Buwog owns and manages 52,000 residential apartments, spread almost equally between Germany and Austria.