Immofinanz Expects to Raise $904 Million From Buwog Share Sale

Immofinanz AG (IIA), the Austrian developer trying to change itself into a commercial landlord, expects to raise 700 million euros ($904 million) in the planned sale of its residential business.

The initial public offering of the Buwog unit will improve the company’s rental yield and reduce debt, according to slides prepared for an analyst call later today. The IPO would take place in the autumn at the earliest, spokeswoman Bettina Schragl said by telephone, adding that no decision has been made.

Immofinanz, based in Vienna, seeks to add about 10,000 German apartments and sell homes in Austria to boost the Buwog unit’s value before a possible sale. The company has 10.5 billion euros of properties and development projects in eastern Europe, Austria and Germany. Most of its assets are offices, stores and warehouses.

“The Buwog Group will be strengthened through further property acquisitions on the German market,” Immofinanz said in its quarterly report today. The company also plans to bolster its business through “specially designed development activities.”

Chief Executive Officer Eduard Zehetner has said he plans to spin off the homes business to sharpen the company’s focus on commercial properties and on eastern Europe and to make the company more profitable.

Higher Yield

Rental income excluding Buwog was equal to 7.8 percent of the company’s property value, compared with 7 percent including the unit, according to the presentation. The company would lower its loan-to-value ratio to 46 percent from 54 percent if it meets a target of raising 700 million euros in the Buwog IPO.

Immofinanz was among the bidders in the 2.4 billion-euro sale of Bayerische Landesbank’s GBW unit, which owns apartments in southern Germany’s Bavaria. It dropped out of the auction in February, saying it didn’t see a way to form a listed German- Austrian company out of Buwog and GBW in time. BayernLB expects to complete the sale this spring, the lender said today.

Net income soared to 106.1 million euros in the third fiscal quarter through January, from 6.32 million euros a year earlier, Immofinanz said in a statement late yesterday. Earnings were helped by asset sales including that of the Kempinski Grand Hotel des Bains in the ski resort of St. Moritz, Switzerland.

Immofinanz rose as much as 4.3 percent in Vienna trading, the biggest gain since July 26. The shares were up 4.2 percent at 3.24 euros as of 2:57 p.m.

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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