Immofinanz AG (IIA) postponed the sale of its residential unit after investor demand for similar deals by competitors failed to meet expectations, the Austrian developer’s chief executive officer said.
Immofinanz won’t proceed with an initial public offering of its Buwog unit this year after share sales by German residential landlords Deutsche Annington Immobilien SE (ANN) and Gagfah SA (GFJ) faltered, CEO Eduard Zehetner said in an interview today. The Vienna-based company, which is trying to turn into a commercial-property landlord, had been targeting an IPO as early as November in Frankfurt.
“We learned from the flops at Annington and Gagfah that the environment is apparently not one in which we can get this done this year,” Zehetner said. “We don’t want to sell in an environment like this and I don’t expect it to improve dramatically until the end of the year.”
Immofinanz is sticking to its goal of selling Buwog and will reconsider the plan in the first half of next year, said Zehetner, 61. The CEO is seeking to list Buwog so Immofinanz can focus solely on commercial properties to improve yields and reduce debt.
Immofinanz dropped 0.5 percent to 3.06 euros in Vienna, the lowest since July 5. The company has a market value of 3.5 billion euros ($4.6 billion), or about 55 percent of its net asset value.
“With the postponement of the IPO, a positive share price trigger has been postponed too,” said Christine Reitsamer, a Munich-based analyst at Baaderbank AG who recommends holding the stock. “We expect the share price to be burdened by it for some time. The Buwog IPO and the potential upside for shareholders has been the most discussed part of the equity story over the last months.”
Immofinanz has 10.5 billion euros of properties and development projects in eastern Europe, Austria and Germany. About 30 percent of that is residential, mostly located in Austria and Germany. Offices, stores and warehouses make up the rest. Zehetner said he is still convinced that separating the two parts of the company is more attractive for investors.
Zehetner had planned to add about 10,000 German homes to Buwog’s holdings before the IPO while selling Austrian apartments to make the unit’s portfolio more like Deutsche Annington’s and Gagfah’s. The CEO had expected to raise about 700 million euros from the sale of more than half of the unit.
In March, Zehetner put the likelihood of a deal this year at more than 50 percent, saying Immofinanz might miss the right occasion if it hesitated. Since then, Deutsche Annington had to reduce the size of its IPO this month and banks managing a sale of Gagfah shares had to pick up stakes in the company to make up for a lack of buyers.
The share sales were affected when Federal Reserve Chairman Ben S. Bernanke’s signaled that he may curb bond-buying this year, according to Zehetner.
“Every investor who’s buying into alternatives to the money market became cautious, and those are the people going into assets like Annington or Gagfah,” he said.
Immofinanz may also consider alternatives to an IPO, particularly spinning off Buwog to Immofinanz’s shareholders, Zehetner said. The company would keep just under 50 percent of Buwog in a spinoff, just as it would in an IPO, he said.
Issuers in Europe, the Middle East and Africa have raised about $13 billion in IPOs this year, compared with about $5 billion in the same period in 2012, according to data compiled by Bloomberg.
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