VIENNA, Nov 26 (Reuters) - Austrian real-estate company Immofinanz will not carry out a capital increase to finance its planned acquisition of a large German property portfolio, its chief executive said.
Immofinanz is in talks to acquire nearly 18,000 German housing units, but has not previously said how it would finance this. If successful, the deal to buy the so-called Baubecon portfolio will allow it to go ahead with a spin-off or stock market listing of its Buwog German and Austrian residential unit.
Chief Executive Eduard Zehetner said he was optimistic about signing the deal with Solaia, a joint venture of Italian real-estate management company Prelios and Deutsche Asset & Wealth Management, by the end of the year.
“Then all the conditions for the Buwog separation will be fulfilled,” he told Reuters on the sidelines of a company event late on Monday, adding that he still saw a spin-off to existing shareholders as more likely than an initial public offering (IPO).
Zehetner said Immofinanz would finance the roughly 900 million-euro deal with cash and debt. Asked whether he would consider a capital increase, he said: “A capital increase would be dilutive. We will not do this.”
Immofinanz currently has 8,430 German housing units and has said it aims to increase that number to at least 15,000-20,000 before the spin-off or Frankfurt IPO of Buwog.
He added that the company had a “plan B” in case the deal fell through. He did not elaborate.
The company plans to reduce its stake in Buwog below 50 percent in a first step in a spin-off or IPO, and then may seek to reduce it further.
Immofinanz’s sustainable cash flow, or funds from operations (FFO), dropped 16 percent to 65 million euros in its fiscal first quarter to end-July on higher property sales and financing costs.
The company, which owns a portfolio of residential and commercial property worth about 10 billion euros, had cash and cash equivalents of 642 million euros as of July 31.
It said it would focus on reducing operating costs and increasing cash flow for the remainder of the financial year. ($1 = 0.7394 euros) (Reporting by Georgina Prodhan; Editing by Pravin Char)