UPDATE 2-Immofinanz buys German homes, plans Buwog spin-off

Wed Feb 12, 2014 5:39pm EST

* Price includes 162 mln eur equity, 736 mln debt

* Transaction seen completing in Q2

* Immofinanz plans initial spin-off of 51 pct of Buwog

By Georgina Prodhan and Isla Binnie

VIENNA/MILAN, Feb 12 (Reuters) - Austrian property group Immofinanz said it had agreed to buy 18,000 German homes for about 892 million euros ($1.21 billion), paving the way for a spin-off of its Buwog unit.

Italy's Prelios, one of the two sellers along with Deutsche Asset & Wealth Management, said on Wednesday the price comprised 162 million euros in equity, 736 million euros in debt, and working capital.

Prelios put the total enterprise value of the deal at 917 million euros and said it was subject to checks that may lead to minor adjustments.

Immofinanz said it would propose the spin-off and listing of Buwog to its shareholders at a meeting on March 14 after securing the deal, which will gave it a critical mass of German housing roughly equal to its Austrian housing stock.

The Austrian group wants to separate its residential assets, held in the Buwog unit, from its commercial operations in central and eastern Europe, making the value of each more evident to shareholders.

Prelios, which is struggling to implement a 2012-2016 turnaround plan, said it expected to book a loss of 135-145 million euros from the sale of the portfolio.

The Italian property group also said its board had agreed to start talks with the Fortress Group over possible integration of their non-performing loans, and managing their real estate assets.

Both parties said they expected the transaction to complete in the second quarter. It includes Buwog's taking over Prelios Deutschland's residential asset and property management business, with about 300 staff and 30 million euros turnover.

Prelios owns 40 percent of Solaia, the joint venture that holds the German property, and Deutsche Asset & Wealth Management owns the remaining 60 percent.

Prelios said 524 million euros in bank loans to Solaia coming to maturity in September would be cancelled at the closing of the transaction, and 212 million euros of subsidised loans would be transferred to Immofinanz with the portfolio.

Immofinanz said its shareholders would receive one Buwog share for every 20 Immofinanz shares they owned, and the initial free float would be 51 percent. The main listing will be in Frankfurt with secondary listings in Vienna and Warsaw.

It said it would relinquish management control over the Buwog group and expected to reduce its 49 percent financial investment over time.

Before the well-flagged deal was announced, shares in Prelios closed up 1.17 percent on the day in Milan at 0.60 euros. In Vienna, Immofinanz shares closed almost one percentage point higher at 3.5 euros.

Immofinanz will hold a news conference in Vienna at 0900 GMT on Thursday.

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