June 6, 2018 / 2:43 PM / a year ago

Property investors in Austria give Starwood the cold shoulder

VIENNA (Reuters) - U.S. investment firm Starwood Capital failed on Wednesday in its attempt to take major stakes in Austrian property groups CA Immo (CAIV.VI) and Immofinanz (IMFI.VI), as shareholders bet a more lucrative deal could be secured.

Barry Sternlicht, Chairman and CEO of Starwood Capital Group, speaks at the 2014 Milken Institute Global Conference in Beverly Hills, California April 28, 2014. REUTERS/Lucy Nicholson

Starwood’s bid could have sped up a shift of powers in the region after residential property groups Conwert and Buwog were recently taken over by German market leader Vonovia (VNAn.DE).

CA Immo and Immofinanz, two out of three remaining listed Austrian property groups, had agreed in 2016 to merge and create a heavyweight but the plan fell through this year after pressure from an activist investor.

Shortly after that, Starwood offered to buy up to 26 percent in CA Immo and up to 5 percent in Immofinanz. But only 0.2 percent of each firm’s shareholders tendered their stakes by the end of the acceptance period on May 30, the companies said.

Starwood was ready to pay CA Immo shareholders 26.70 euros per share, and Immofinanz shareholders 2.03 euros per share.

CA Immo traded at 29.24 euros and Immofinanz at 2.08 euros at 1350 GMT on Wednesday, indicating investors hoped for more.

Analysts and the property groups have said consolidating the remaining groups would make sense as it would increase sales power and financial strength.

There were several parties looking to buy, a property banker familiar with the matter said in March.

CA Immo’s 4.3 billion euro portfolio comprises offices and shops in Austria, Germany and eastern Europe. Immofinanz’s portfolio is comparable in value and geographical focus but some of the portfolio is less attractive, according to analysts.

A third listed property firm, S Immo (SIAG.VI), is also included in some consolidation scenarios. Immofinanz already holds 29 percent in S Immo, which return has a 12 percent stake in Immofinanz and a 6 percent stake in CA Immo.

While CA Immo had welcomed Starwood’s interest. But Immofinanz had dismissed the offer as too low and, after the Starwood bid, put its 26 percent stake in CA Immo on the block, inviting investors to express interest by the end of April.

Immofinanz declined to comment on the sales process on Wednesday. A decision is expected in summer.

Reporting by Kirsti Knolle; Editing by Edmund Blair

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