VIENNA, Sept 1 (Reuters) - Property company Buwog said Berlin's rising prices have made it a less attractive market, pushing the Austrian group to seek expansion in Germany's north-west.
Buwog, which marked its stock market debut in Frankfurt and Vienna in April, plans to tap cash flow to buy between 2,000 and 4,000 units in Germany each year for the coming three years. This year, Buwog is set to buy around 2,000 units, Chief Executive Daniel Riedl said on Monday.
"If I look at our two focus areas, Berlin on the one hand and north-west Germany ... on the other, it is more likely that we buy between Kiel and Kassel," Riedl told Reuters.
"Because demand in Berlin, both national and international, is very high, prices are high and, with that, yields low."
Buwog's biggest growth driver will be in Germany because prices in Vienna are high and people are sitting on their properties, rather than selling them, Riedl said on the sidelines of a news conference.
Buwog, whose portfolio comprises 53,000 units, has a 1.5 billion euro ($1.97 billion) project development pipeline to build 5,000 units.
Shareholders in Austria's Immofinanz this year approved a spin-off of an initial 51 percent of Buwog to separate Buwog's portfolio of German and Austrian homes from Immofinanz' eastern European commercial assets.
Immofinanz bought 18,000 German homes for about 892 million euros in February, paving the way for a spin-off.
Buwog plans to refinance a 260 million euro convertible bond from Immofinanz this year, Riedl added, either through a new convertible or mortgage-backed financing.
Buwog last week reported recurring funds from operations (FFO) of 69.2 million euros and proposed a dividend of 0.69 euro per share. It plans to continue distributing dividends based on an expected recurring FFO of 75 million euros in 2014/15.
(1 US dollar = 0.7613 euro) (Reporting By Shadia Nasralla; Editing by Ruth Pitchford)