Conwert Eyes German Real Estate, Sells Eastern Europe

Conwert Immobilien Invest SE plans to buy German residential real estate, part of a strategy shift to focus more on buying and renovating apartment blocks.

The Vienna-based company may spend as much as 200 million euros ($260 million) on residential property in German cities this year, it said in a statement. Conwert said it plans to sell commercial properties as well as eastern European assets valued at 127 million euros within the next two years.

“The regrouping of our portfolio is going to continue,” Chief Executive Officer Johannes Meran said at a news conference today. That means selling commercial real estate and reinvesting the proceeds in higher-yielding residential properties, mainly in Germany, he said.

Conwert posted a net loss of 167.8 million euros for 2012 after it wrote down more than 117 million euros on goodwill and other intangible assets. It bought a majority stake in Hamburg’s KWG Kommunale Wohnen AG last year, seeking to better position itself as a manager of residential real estate. The goal is to become a sustainable dividend-paying company on the basis of stable rental income, Meran said.

The company said it won’t pay a 2012 dividend and will only provide a special dividend of 15 cents a share related to last year’s capital decrease. It assumes the company would be able to propose a dividend of at least 20 cents a share for 2013.

German Portfolio

Around 60 percent of the company’s 2.9 billion-euro portfolio is in Germany. That’s set to rise to 80 percent within the next two years, Meran said.

“The German real estate market is active,” said Stavros Efremidis, Conwert’s executive director. “We will get opportunities this year.”

The company predicts further restructuring charges this year, but they will “definitively be lower than 2012,” Meran said. Conwert aims to improve funds from operations, which gauges a property company’s ability to raise cash, to 25 million euros in 2013 from 20.7 million euros a year earlier.

Conwert fell 1.4 percent to 8.75 euros at 2:11 p.m. in Vienna. The shares have fallen more than 10 percent this year.

“With rising recurring cash flows, a clearer focus on residential and lower exposure to higher-risk segments and markets the share price could develop positively in the next quarters,” Thomas Neuhold, an analyst at Kepler Capital Markets, wrote in a note to clients.

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