VIENNA (Reuters) - Austrian real estate group Immofinanz (IMFI.VI) has agreed to sell its five Moscow shopping centers to Russia’s Fort Group for 901 million euros ($1.05 billion), clearing the last hurdle to its merger with Austrian rival CA Immo (CAIV.VI).
Both Austrian groups have portfolios of around 4 billion euros each across Germany and central and eastern Europe, including almost 3.2 million square meters of rentable space combined.
Immofinanz shares rose more than 3.5 percent to a two-month high on the news. CA Immo shares were up 0.4 percent.
Immofinanz had offered its Russian tenants, many of whom struggled to pay dollar-denominated bills, rent reductions for years, which weighed heavily on its results.
For Fort Group, which Reuters reported on Oct. 4 was the likely buyer, the sale means it can expand from its St Petersburg base into Moscow’s retail market.
The sale includes 675 million euros, converted from rubles, in debt on the portfolio.
“This transaction will immediately recover equity and significantly reduce our financial liabilities and average financing costs,” Immofinanz Chief Executive Oliver Schumy said in a statement.
“Immofinanz can now concentrate on further growth to become one of the largest players on the commercial property market in Europe.”
The deal will cut around 169 million euros from Immofinanz’s bottom line in the third quarter, which translates into a reduction of its net asset value per share of 0.15 euros.
Over the next four years Immofinanz hopes to recover 151 million euros based the malls’ future earnings and tax reimbursements, it said.
Immofinanz bought 26 percent in CA Immo in April 2016, the first step towards a merger of the two office and commercial property groups. Schumy has said the aim of the merger was to become one of the top twelve players in Europe.
Previous merger attempts have failed and the latest talks were halted a year ago until Immofinanz shed its Russian assets.
A spokeswoman for Immofinanz said the company will soon agree with CA Immo an updated schedule for resumed talks.
CA Immo had no comment, beyond stating it has taken note of the sale.
($1 = 0.8587 euros)
Reporting by Shadia Nasralla, editing by Louise Heavens