REAL ESTATE - Belgian real estate company Cofinimmo told IPE Real Estate that it would sell off some of its property after losing a portfolio of state-owned buildings to rival Befimmo.

"After looking at recent price levels, we’re looking at selling," said Cofinimmo CEO Sergé Fautre. "At the moment, we’d rather be sellers than buyers."

The decision comes as the latest twist in a long-running saga that started with an agreement between the Belgian state and Cofinimmo to set up for a €1.2bn Sicafi – a fixed-capital real estate investment trust. The Sicafi was to include 79 buildings used by Belgian and EU agencies.

However, defeated joint bidders AXA and Befimmo in the autumn filed a suit against the state alleging irregularities in the tendering process. As a compromise – and in a bid to resolve the issue before the end of 2006 – the government in December cancelled the deal with Cofinimmo in favour of a sealed-bid auction, which Befimmo won.

The acquisition led credit ratings agency S&P to put its BBB long-term and A2 short-term rating for Befimmo on creditwatch with negative implications. Andreas Kindahl, credit analyst at S&P, said: "It’s a more aggressive investment than we anticipated and it affects the firm’s financial profile in terms of leverage. If we downgrade the credit rating, refinancing could be a problem."

Fautre pointed out that Cofinimmo offered only slightly less than Befimmo for the portfolio.

"We weren’t far off but we weren’t prepared to pay that much," he said. "We’re frustrated but we have no regrets in terms of the price."

He said the recent debacle – which he said was based on "a minor administrative error" – would not deter Cofinimmo from bidding for public real estate contracts. "The state is our most important client," he said.