* FFO down 16 pct on taxes, financing costs
* Buwog IPO or spin-off still seen possible in calendar 2014
* Full-year focus on costs, cash flow generation (Adds details on Buwog IPO, outlook, cash flow)
VIENNA, Sept 24 (Reuters) - Austria's Immofinanz reported on Tuesday a 16 percent drop in first-quarter sustainable cash flow, or funds from operations (FFO), on higher property sales taxes and financing costs.
The property group's FFO was 65 million euros ($88 million)for the quarter to end-July, while earnings before interest and tax (EBIT) rose 5 percent to 200 million euros on higher income from property sales and development.
Immofinanz, which owns a portfolio of residential and commercial property worth about 10 billion euros, said it was still preparing for a 2014 stockmarket listing or spin-off of its German and Austrian residential property unit, Buwog.
For the rest of its financial year, Immofinanz said: "Activities will also focus on the reduction of operating costs and cash flow generation. BUWOG will be strengthened through further property acquisitions on the German market."
Rental income was roughly flat at 161 million euros as the group owned fewer properties but increased occupancy rates, and income from asset management was also flat at 136 million euros.
Income from property sales rose 21 percent to 6 million euros, while income from property development was 8 million euros, compared with a loss of 1 million euros a year earlier.
Net profit rose to 118 million euros from 10 million thanks mainly to foreign currency effects and higher valuations of derivatives, as well as the improved operating result. ($1 = 0.7412 euros) (Reporting by Georgina Prodhan; Editing by Greg Mahlich)