Austrian investor Immofinanz and its 54%-controlled unit Immoeast said on Friday that they are taking 'comprehensive measures' to secure liquidity and reduce costs in an attempt to reassure investors and stabilise their share price. Immoeast and Immofinanz stocks suffered heavy losses on Thursday, closing at an historical low of EUR 1.86 and EUR 2.75 respectively, down by 34% and 28% on opening levels.
Austrian investor Immofinanz and its 54%-controlled unit Immoeast said on Friday that they are taking 'comprehensive measures' to secure liquidity and reduce costs in an attempt to reassure investors and stabilise their share price. Immoeast and Immofinanz stocks suffered heavy losses on Thursday, closing at an historical low of EUR 1.86 and EUR 2.75 respectively, down by 34% and 28% on opening levels.
In a statement on Friday, Immoeast said that its board has decided to reduce the firm's EUR 4.4 bn development pipeline by at least EUR 2 bn in order to reduce costs. 'This can be entirely made by delaying or cancelling further building stages and delaying or cancelling the delaying projects still in the planning stage. Projects already under construction will certainly be continued,' Immoeast said.
It added: 'These measures will be set in all regions, especially in Romania.'
Currently, Immoeast is negotiating the sale of EUR 400 mln worth of assets in a move to further increase the firm's financial resources.
Immofinanz will undertake similar measures, with all planned projects coming under review in the face of the 'deeply chanced financial market environment.' Its subsidiaries Immoaustria and Immowest are also in talks to sell properties worth EUR 400 mln.
On Thursday the two Vienna-based companies rushed to dismiss rumours that they had been affected by the collapse of US investment bank Lehman Brothers. The announcement failed to stop shares from slumping by around 30% on the same day. Immofinanz and Immoeast reiterated that they have only two business relations with Lehman Brothers. These consist of a long-term credit facility of EUR 54 mln with a Lehman company and Adama, a real estate development firm in which Immoeast is co-partner with a Lehman Brothers fund. Immoeast has a 32% stake in Adama, while Lehman Brothers holds a 6% stake.
Immoeast reported a first-quarter operating loss of EUR 261 mln this week, mostly due to the devaluation of its assets in emerging European countries. The figure compares with a profit of EUR 93 mln in the same period last year.