Immofinanz AG may add German assets to its Buwog Austrian residential unit to make it more attractive to investors ahead of a possible initial public offering, Chief Executive Officer Eduard Zehetner said.
“German residential is currently sexy for whatever reason,” he said today at an analyst briefing. “If Buwog was listed in Germany, it would trade around its net asset value,” compared with 50 percent for Immofinanz currently.
Foreign investment in Germany’s housing market surged this year as private-equity firms, insurance companies and pension funds seek better returns than bonds while avoiding countries roiled by Europe’s debt crisis. A sale of apartments owned by Fortress Investment Group LLC may be the next big deal after private-equity firms including New York-based Blackstone Group LP and Cerberus Capital Management LP made purchases this year.
A spinoff of Buwog, which owns 2.4 billion euros ($3.1 billion) of Austrian homes, could be completed within the next two years including the purchase and integration of German assets, said Zehetner. The sale would sharpen Immofinanz’s focus on commercial properties and make it easier for investors to understand the company, he said.
About half of Immofinanz’s 10.4 billion euros of properties and development projects are in eastern Europe, where it’s the biggest publicly traded real estate company. Most of the assets in that region and in Germany are commercial properties such as offices, shops and warehouses. Buwog accounts for about a quarter of Immofinanz’s assets.
Immofinanz was up 0.6 percent to 2.93 euros at the 5:30 p.m. close in Vienna, the highest close since July 2011. The shares have gained 35 percent in the past 12 months and now trade at more than 10 times their low in November 2008, a week before Zehetner joined the management board when the company was close to collapse.
The CEO said there’s no certainty a Buwog IPO will happen. Earlier this month he told Boerse-Express that there’s currently no market for a sale.
Zehetner said that Immofinanz is close to concluding several asset sales as part of his plan to sell 500 million euros of properties annually in the five years to 2015. While sales in the first quarter fell short of the target at 83.5 million euros, the company will meet the full-year goal, he said.
Immofinanz profit fell by 67 percent in the fiscal first quarter on currency and derivative losses and smaller gains in the value of its properties. Net income declined to 9.2 million euros in the three months through July from 28.2 million euros a year earlier, the Vienna-based company said in a statement today. Rental income climbed 14 percent to 162.3 million euros.
Zehetner, who reinstated dividends in 2011 after a four-year hiatus, said he will divert some of the funds earmarked for dividends and spend them on buying back shares as long as they trade more than 40 percent below NAV. The company yesterday said it would cut by 25 percent the 20-cent dividend planned for this fiscal year and spend about 50 million euros on a share buyback over the next seven months.