Kapitalmarkt
15.03.2017
Update on disposal of Russia, sale of non-core assets, share buyback and CA Immo
The following is an update on our planned disposal of the Russian portfolio, the ongoing sale of non-core properties, share buybacks as well as our planned merger with CA Immo. These topics have been adressed to us by the investor Petrus Advisers in an open letter.
1) Russia: Sale of the Russian portfolio
The separation of the Russian portfolio (via sale or spin-off) is currently in progress and should be completed as planned during the current financial year. We have used the past months to optimally prepare the separation process (organisation of a data room, extensive vendor due diligence, etc.).
Moreover, we have adapted our five shopping centers in Moscow as best as possible to reflect the market environment. For example: we have installed an experienced, local management team and, for our Rostokino shopping center, entered into a cooperation with ECE, the market leader in the European shopping center segment. At the same time, professional retail concepts were developed for the shopping centers to protect their positioning on the market over the long-term.
These measures have brought positive results and are an important prerequisite for the planned separation of the Russian portfolio. The occupancy rate in our five shopping centers equalled 81% at the end of July 2016 and, including signed contracts, has already risen to over 90% (end of January 2017). The new major tenants include, for example, the international toy merchant Hamley’s with approx. 5,000 sqm and the Russian fashion provider Podium Market, which has rented over 3,000 sqm of space.
The past months have also brought a stabilisation in the underlying economic conditions in Russia (Ruble exchange rate). The decision to schedule a longer period of time for the separation of our shopping centers was therefore correct.
There is sound interest in our Russian properties. A structured sale process will be started shortly and will include invitations to roughly 25 prequalified parties.
2) Sale of non-core assets
This process is on schedule. Our previously announced plans call for the sale of properties with a volume of approx. EUR 1 billion over the medium-term. These properties no longer fit with our core portfolio because of their location, size, quality etc.
Preliminary results: We sold properties with an estimated volume of approx. EUR 270 million by the end of December 2016. In addition, properties with an estimated value of more than EUR 400 million are classified as held for sale over the short-term (IFRS 5).
3) Call for a takeover offer for CA Immo shareholders:
We refer to our already announced strategy which calls for a statutory merger with CA Immo. The basis for this merger is our investment of 26% plus four registered shares in CA Immo. The combined company will become one of the major commercial property corporations in Continental Europe. The annual general meetings that will decide over the merger are expected to take place, as announced, in 2018.
4) Share buyback "in line with the dilution from the convertible bond exchange in January 2017"
Share buybacks are an integral part of our distribution policy. We have regularly stated, and also implemented, this policy in the past. Our measures in previous years also regularly included the withdrawal of shares to create added flexibility for share buybacks (limit: 10% of share capital).
In comparison: The number of shares equalled 1.129 billion as of 30 April 2014 and 1.039 billion as of 31 January 2017, whereby 10 million are classified as treasury shares.
That represents a reduction of 100 million in the number of shares. It also offsets the above-mentioned diluting effects from the partial conversion of the convertible bond 2018. In addition, we recently approved a share buyback programme that will cover a further volume 20 million shares.
1) Russia: Sale of the Russian portfolio
The separation of the Russian portfolio (via sale or spin-off) is currently in progress and should be completed as planned during the current financial year. We have used the past months to optimally prepare the separation process (organisation of a data room, extensive vendor due diligence, etc.).
Moreover, we have adapted our five shopping centers in Moscow as best as possible to reflect the market environment. For example: we have installed an experienced, local management team and, for our Rostokino shopping center, entered into a cooperation with ECE, the market leader in the European shopping center segment. At the same time, professional retail concepts were developed for the shopping centers to protect their positioning on the market over the long-term.
These measures have brought positive results and are an important prerequisite for the planned separation of the Russian portfolio. The occupancy rate in our five shopping centers equalled 81% at the end of July 2016 and, including signed contracts, has already risen to over 90% (end of January 2017). The new major tenants include, for example, the international toy merchant Hamley’s with approx. 5,000 sqm and the Russian fashion provider Podium Market, which has rented over 3,000 sqm of space.
The past months have also brought a stabilisation in the underlying economic conditions in Russia (Ruble exchange rate). The decision to schedule a longer period of time for the separation of our shopping centers was therefore correct.
There is sound interest in our Russian properties. A structured sale process will be started shortly and will include invitations to roughly 25 prequalified parties.
2) Sale of non-core assets
This process is on schedule. Our previously announced plans call for the sale of properties with a volume of approx. EUR 1 billion over the medium-term. These properties no longer fit with our core portfolio because of their location, size, quality etc.
Preliminary results: We sold properties with an estimated volume of approx. EUR 270 million by the end of December 2016. In addition, properties with an estimated value of more than EUR 400 million are classified as held for sale over the short-term (IFRS 5).
3) Call for a takeover offer for CA Immo shareholders:
We refer to our already announced strategy which calls for a statutory merger with CA Immo. The basis for this merger is our investment of 26% plus four registered shares in CA Immo. The combined company will become one of the major commercial property corporations in Continental Europe. The annual general meetings that will decide over the merger are expected to take place, as announced, in 2018.
4) Share buyback "in line with the dilution from the convertible bond exchange in January 2017"
Share buybacks are an integral part of our distribution policy. We have regularly stated, and also implemented, this policy in the past. Our measures in previous years also regularly included the withdrawal of shares to create added flexibility for share buybacks (limit: 10% of share capital).
In comparison: The number of shares equalled 1.129 billion as of 30 April 2014 and 1.039 billion as of 31 January 2017, whereby 10 million are classified as treasury shares.
That represents a reduction of 100 million in the number of shares. It also offsets the above-mentioned diluting effects from the partial conversion of the convertible bond 2018. In addition, we recently approved a share buyback programme that will cover a further volume 20 million shares.
IMMOFINANZ – a publicly listed European commercial real estate group with focus on two asset classes: Office and retail in eight core markets.