Vienna- and Warsaw-listed property group Immofinanz has closed the sale of its Russian retail portfolio to Russia's Fort Group for around €900 mln, thus executing a key precondition for its planned merger with fellow Vienna-listed real estate company CA Immo.
The disposal completes its exit from the Russian market, which was part of the company's strategic plan for 2017.
'We repositioned the five Moscow shopping centers to reflect the changed market environment in Russia. That set the stage for the start of a multi-stage structured sales process which has now ended with the transfer of the properties to the buyer,' said Dietmar Reindl, COO of Immofinanz.
The sale involved the divestment of the Austrian holding company which has interests in property companies owning Moscow-based retail assets.
Turbulent times
The Russian sale removes a major hurdle in the turbulent courtship between Immofinanz and CA Immo. The planned merger has been on ice since December 2017 when Immofinanz delayed the sales process for the Moscow shopping centres due to the weakness of the Russian market.
'Over the past two years we have eliminated a number of risks – for example through the settlement of historical lawsuits filed by investors and the reduction of risks in our portfolio. However, the most important milestone was the sale of our retail portfolio in Moscow,' said Oliver Schumy, CEO of Immofinanz.
'The market climate in Russia has been difficult for many years and has had a substantial negative effect on Immofinanz. As previously announced, we finalised the sale of the Russian shopping centres before the end of 2017 and closed the transaction in the shortest possible time.'
He added: 'The Immofinanz portfolio with its office and retail asset classes is now clearly focused on the stable Western European markets of Germany and Austria and on the promising growth markets in CEE.'
The sale of the retail portfolio in Moscow generates immediate net cash flows (after the repayment of existing debt financing) of RUB 5.0 bn (around €72 mln). The purchase agreement also includes an additional guaranteed payment of €14.5 mln in January 2022 and an earn-out of up to RUB 9.0 bn (around €129.6 mln) based on the revenues from the shopping centres in 2021, which is also due in 2022.
