Immofinanz settles inter-company loan with EUR 1.5bn sale of Austrian unit

Austrian real estate group Immofinanz is selling its Austrian property arm, ImmoAustria Immobilien Anlagen, to its Central and Eastern European subsidiary, Immoeast, for EUR 1.46bn. The deal is primarily designed to repay the EUR 1.7 bn inter-company loan from Immoeast to the rest of the Immofinanz group.

Immofinanz said the sale was part of restructuring measures agreed by the Immofinanz board last year following the resignation of Karl Petrikovics who had led Immofinanz and Immoeast since their formation in 1990 and 1998. The Petrikovics era came to an end when the group was rocked by the deterioration of the real estate market, concerns about the group's liquidity and questions about a missing EUR 500 mln payment. The question of the payment was resolved during the short tenure of Thomas Kleibl as CEO.

Kleibl stepped down from his post at the Immofinanz group on 28 February 2009 after putting the restructuring programme in place. He has been replaced as speaker for the board by Eduard Zehetner, who is to continue in his function as chief financial officer.

In a statement on Monday, Immofinanz said Immoaustria owns all of the group's properties in Austria, including prestigious properties such as Vienna Twin Tower, Business Park Vienna and City Tower. The lion's share is made up of the numerous housing properties in the Buwog/ESG portfolio. ImmoAustria will now be merged into Immoeast, which up to now only had properties in the emerging markets in Eastern Europe.

The purchase price was determined on the basis of the Austrian unit's net asset vale (NAV) at end-October 2008 and comes to EUR 1.46 bn before deductions for outstanding dividend obligations. Immofinanz said the move would significantly reduce the burden on both companies' balance sheets with corresponding positive effects on the equity ratios.

'Both listed companies will profit from this transaction. At Immofinanz, a high short-term liability will be eliminated; at Immoeast, outstanding demands will be converted to a first-rate property portfolio suited to the company's strategy,' the company said.

The transaction was overseen by law firms bpv-Hügel and Schönherr, the valuation opinion was submitted by Morgan Stanley.