Immofinanz reports EUR 1.3bn devaluation of portfolio

Vienna-listed Immofinanz saw a EUR 1.3 bn devaluation of its real estate portfolio during what it described as 'a very challenging financial year' from May 2008 to end-April 2009.

The group, which invests in German-speaking countries and the CEE region, said in its preliminary report that its real estate assets were valued at EUR 7.9 bn at end-April this year, compared to EUR 9.6 bn in the previous year, a fall of 18%. Property under construction was valued at EUR 572 mln (2007/8: EUR 849 mln).

As a result of the real estate slump and 'malversations caused by the management of Constantia Privatbank', Immofinanz saw its financial result plunge to minus EUR 1.3 bn compared to a EUR 41 mln profit the year before. This was despite an increase in rental revenues to EUR 547 mln compared to EUR 502 mln in the previous book year. Sales revenues rose 12% to EUR 763 mln.

In autumn last year, Immofinanz and its 51% subsidiary Immoeast found themselves at the centre of a probe into balance sheet fraud and breach of trust by former CEO Karl Petrikovics, who was forced out at the beginning of October.

Immofinanz attributed the decrease in its result to a write down of financial instruments (- EUR 565.3 mln), depreciations in relation to associated companies (- EUR 367.5 mln), exchange rate effects (- EUR 326 mln) and a negative interest balance (- EUR 182 mln).

Earnings before interest and tax slumped to minus EUR 2 bn compared to EUR 514.5 mln in the 2007/08 financial year. The book value per share at end-April was EUR 4.75, well down on the EUR 9.47 in 2007/08. Net Asset Value per share came to EUR 5.25 compared with EUR 11.55 in the previous year.

The final results for 2008/9 will be published on 27 August.

Following the departure of Petrikovics, the company has worked to stabilise its financial position. This has resulted in an agreement with holders of convertible bonds that reduces nominal liabilities by EUR 344.4 mln.

Immofinanz said it also eliminated 'a liability threatening the existence of the company' with the sale of its Austrian property arm, ImmoAustria, to its Central and Eastern European subsidiary, Immoeast, for EUR 1.46 bn to settle an inter-company loan.

Immofinanz said its financial structure was now 'very sound'.