Immofinanz AG, the Austrian developer trying to change into a commercial landlord, expects to raise 700 million euros ($904 million) from the sale of its residential unit as soon as November. The shares rose the most in more than seven months.
Immofinanz plans to sell more than half of the company in an initial public offering of its Buwog unit and would sell more at later stages, Chief Executive Officer Eduard Zehetner told analysts in a conference call today. The likelihood of a deal this year is more than 50 percent because the Vienna-based company might otherwise miss the right occasion, he said.
“Whenever you have certain market circumstances, there is always the danger that they change and that times become more volatile or opportunities disappear,” Zehetner said. “We have to speed up if we want to catch this window.”
Immofinanz rose 5 percent to 3.26 euros at the 5:30 p.m. close in Vienna, the biggest gain since July, giving the company a 3.7 billion-euro market value. It was the biggest gainer in the 60-company Bloomberg EMEA Real Estate Index, which was little changed today.
Immofinanz wants to give up its residential business and focus purely on commercial properties to improve the company’s rental yield and reduce debt, according to slides prepared for the analyst call. The company has 10.5 billion euros of properties and development projects in eastern Europe, Austria and Germany, mostly offices, stores and warehouses.
The IPO hinges on Immofinanz’s success in adding about 10,000 German apartments and selling homes in Austria, Zehetner said.
“A sole Austrian IPO wouldn’t work, we have to have a German-Austrian portfolio” to sell the unit at a price above its net asset value, he said. The company is bidding for two German asset portfolios, he said, declining to elaborate.
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 the southern German state of 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 said today it expects to complete the sale within three months.
Net income rose 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 yesterday. Earnings were helped by asset sales, including the Kempinski Grand Hotel des Bains in the Swiss ski resort of St. Moritz.