by
Wilhelm Rasinger
22.04.2015

Clarification on listed real estate companies

Shortly before his departure into retirement Immofinanz CEO Eduard Zehetner proved he is a tough combatant when he is attacked and sees his life's work, the reorganisation of Immofinanz, at risk.Not every dispute of the last few weeks was successfully settled, but ultimately the overall result is what counts: the CA Immo/O1 group has become the second strongest shareholder, but its influence is limited. It is hoped that CA Immo/O1 accepts the unambiguous results of the vote in the EGM and refrains from attempting to make gains through dubious lawsuits in court. It is up to the strongest shareholder group, Fries, to find an acceptable modus vivendi with CA Immo/O1 and enable representation on the Immofinanz supervisory board at the next annual general meeting.

The absence of CA Immo/O1 candidates Oliver Puhl and Tamara Gutmann at the extraordinary general meeting on 17 April angered numerous free float shareholders. The withdrawal concerning the CA Immo bid was a triumph of reason and the correct response to the sentiment among many shareholders.

Interestingly enough, before the general meeting the Austrian Shareholder Association (IVA) was asked by CA Immo shareholders to approve the bid so that they can exit CA Immo at EUR 18.50 because the bid in fall 2014 at EUR 18.50 was not for all Shares.

Reciprocal share purchases and strategies of control are clearly opposed by the majority of the shareholders. The priority is for properties to be properly managed and developed, revenues generated and dividends paid. Share buybacks are no substitute for dividends and only make sense if there is a glaring undervaluation.

Once more the dilemma was demonstrated between share price and NAV (net asset value), which is calculated by experts from the valuations. Under new leadership as of 1.5.2015, Immofinanz management must work hard for the non-acceptance of the EUR 2.80 offer to have been appropriate because the share price is moving in the direction of EUR 4 due to good results.

Despite considerable support from Hans Peter Haselsteiner, Deutsche Wohnen, probably the best core shareholder conwert ever had, clearly lost the away game in Austria due to lacking flexibility and an incorrect assessment of domestic conditions. Management, which rejected the offer, and the core shareholder must now demonstrate that in the interest of all shareholders they can increase the value or, as part of an orderly liquidation, generate more than NAV.

For the Vienna capital market the disputes of the last few weeks have been suspenseful, instructive and out of the ordinary, but as a whole a sign of strength.