IMMOFINANZ Bonds

Financing Strategy and Capital Structure

IMMOFINANZ’s financing strategy is designed to ensure sufficient liquidity at all times, to achieve and maintain a balanced capital structure and maturity profile and to also optimise financing costs. The best possible structuring of debt financing is an important priority and, in addition to successful property management, represents a decisive factor for the results generated by IMMOFINANZ’s business activities.  

2018 Financial Year 

Financing with a total volume of EUR 735.3 million was refinanced in 2018. That represents approximately 30.0% of the total financial liabilities as of 31 December 2018 and involves extensions as well as new financing.

In the area of property financing, the strategic combination of individual properties in a particular brand or asset class into specific portfolios led to the realisation of more attractive conditions. Specific examples include the refinancing of VIVO! shopping centers in Poland through portfolio financing with a volume of EUR 78.0 million, the refinancing of an office property portfolio in Hungary with a volume of EUR 137.2 million and the refinancing of an office portfolio in Prague with a volume of EUR 115.0 million.

Shortly after the end of the reporting year, IMMOFINANZ AG received a long-term issuer rating of BBB- with stable outlook from S&P Global Rating. Based on this investment grade rating, a EUR 500 million benchmark bond with a fixed coupon of 2.625% per year was issued. The net proceeds from the bond issue were used during the first quarter of 2019 to refinance existing collateralised financial liabilities and for general corporate purposes.

Cash and cash equivalents, including cash held for sale (IFRS 5), totalled EUR 632.0 million as of 31 December 2018, and financial liabilities amounted to EUR 2.4 billion (31 December 2017: EUR 2.6 billion). Net debt, i.e. debt after the deduction of cash and cash equivalents held by the Group, equalled EUR 1.8 billion (31 December 2017: EUR 2.1 billion).

Robust balance sheet structure

IMMOFINANZ has a robust balance sheet structure with an equity ratio of 48.0% (31 December 2017: 46.3%) and a net loan-to-value ratio (net LTV) of 37.3% (31 December 2017: 40.8%).

The net LTV shows the carrying amount of financing less cash and cash equivalents in relation to the total carrying amount of the properties and the EPRA NAV for the roughly 29% interest in S IMMO AG (S IMMO). The closing for the acquisition of this investment took place in the third quarter of 2018 for a price of approximately EUR 390.0 million. In addition, the package sale of the investment in CA Immo – approximately 26% plus four registered shares – for a total price of EUR 757.9 million was finalised during the third quarter of 2018.

Graphic Average Financing Costs

Graphic Development Net LTV

Further reduction in financing costs

Financing costs declined substantially to EUR -68.4 million in 2018 (2017: EUR -94.9 million). The average financing costs for IMMOFINANZ equalled 2.14% per year as of 31 December 2018 (31 December 2017: 2.31% per year) including the derivatives used for interest rate hedging and 1.78% per year (31 December 2017: 1.97% per year) excluding the derivatives used for interest rate hedging. 

Unencumbered properties

In addition to properties which carry external financing and are encumbered through standard market collateral (e.g. mortgages, pledge of company shares), EUR 749.0 million, or 17.0%, of the total property carrying amount was not externally financed and therefore unencumbered as of 31 December 2018 (31 December 2017: EUR 846.1 million or 19.0%).

Unencumbered properties

The share of unencumbered properties increased substantially to EUR 1,429.8 million, or 32.5% of IMMOFINANZ’s total investment property, during the first quarter of 2019 following the refinancing of existing collateralised financial liabilities from the net proceeds of the benchmark bond. Including the S IMMO shares (valued at the EPRA NAV), which are not backed by any financing, this value increases (pro forma) to EUR 1,844.2 million, or 38.3% of investment property.

Graphic Unencumbered properties Before/After Repayment