Logicor in exclusive talks to buy €550m Immofinanz portfolio

Blackstone’s European logistics arm Logicor is reportedly in exclusive talks to buy Immofinanz’s entire logistics platform valued at around €550 mln.

According to a news report by PropertyWeek, the portfolio consists of 59 assets mostly located in Germany, with a minority in Poland, Hungary, Slovakia, Romania and Russia.

The Austrian property group confirmed in August that it is in talks to sell its 1 million m2 logistics portfolio, valued at more than €500 mln, as part of a strategic reorientation to concentrate on the office and retail property sectors.

An Immofinanz spokesperson said the company aims to sell the portfolio in the current business year 2015/16 but declined to comment on 'speculation regarding potential buyers'.

The loss-making listed CEE property investor said last month that 'negotiations with interested parties were in progress'.

'We are very pleased with the development of our logistics segment. However, our major competitors are nearly ten-times as large and this prevents us from gaining a leading position in our core region. The market is now seeing a strong shift in investors’ interest to logistics properties, a development that is also reflected in attractive price levels', said Immofinanz CEO Oliver Schumy.

Logicor declined to comment.

Earnings hit by downturn in Russia
The news came as Immofinanz posted a net loss of €361 mln for the year ended 30 April compared to a profit of €72 mln for the previous fiscal year. The company tumbled into the red due to the downturn in Russia and competition in the eastern European office market. As a result the company is not paying dividend for the year.

Immofinanz entered the logistics business in 1991 and now owns 59 standing assets. Most are located in Germany, while other logistics facilities are situated in Poland, Hungary, Slovakia, Romania and Russia. There are also a number of development projects.

A sale of the portfolio had been on the cards since April this year when Immofinanz bundled its logistics assets under the new umbrella brand, LOG.IQ.

Other divestments
Immofinanz has already spun off its residential property business into newly listed entity Buwog and plans to divest its shares in the business during the 2015/16 financial year.

'We intend to concentrate the portfolio on our core retail and office sectors and further expand Immofinanz's competitive position in these areas,' Schumy said.

After the planned sale of the logistics properties and the deduction of recent sales (the City Box self-storage chain in the Netherlands, residential properties and a hotel in Vienna), Immofinanz's portfolio will consist of 48.8% retail and 43.7% office assets. Other non-core properties earmarked for sale are in the Other segment (7.5%).

Pure player
Immofinanz hopes to restore its competitive edge by completing its transformation into a pure office and retail property player.

The liquid funds generated from the planned sales will be invested in acquisitions and the company’s own development projects in the retail and office asset classes. Austria, Germany and Poland will represent the geographic focal points for these efforts. 'Growth will be directed towards improving sustainable profitability and creating a more balanced portfolio distribution between Western and Eastern Europe,' the CEO said. At present, roughly 32% of the portfolio is located in Austria and Germany and 68% in Eastern Europe, including Moscow.

The geographic focus for the office segment will be placed exclusively on the capital cities in the core countries and the 'Big-7' cities in Germany.

Expansion in the retail segment could include capital cities (prime shopping centres) as well as secondary and tertiary cities (VIVO! and STOP.SHOP.).

Activities will also include targeted measures for the standing investments, above all in the office segment, to maintain their high quality and improve occupancy and earnings. 'With these measures, we not only want to approach new customers, but also remain an attractive partner for our current tenants. That is a very important competitive factor,' Schumy said.

Project development in 2015/16 will include, among others, the completion of the first phase of construction on the Gerling Quartier in Cologne, the first section of the Metroffice complex in Bucharest and the VIVO! shopping centre in the Polish city of Stalowa Wola. The planned average investment volume is €300 mln per year.