Immofinanz and Immoeast may merge till the end of 2008

Karl Petrikovics, chief executive of Immofinanz and Immoeast funds, Austria’s largest property developers, that have investments amounted to over four billion euro in Romania, in an interview for Bloomberg stated that those two funds can merge till the end of this year. “The first step is the Constantia acquisition. (n.red. – the real estate division of Constantia Privatebank)”, Karl Petrikovics adds. At the beginning of this month, Immofinanz shareholders approved the purchase by both developers of Constantia Privatbank real- estate unit for 440 million euro, following to set up in this direction a new company I&I Real Estate Asset Management. The biggest part of the company, 60% will be owed by Immoeast. The consequence is that the brokerage and administration of the real-estate properties owed by those two funds will be integrated, in order to enable them to save money. Immofinanz created Immoeast in 1999 to manage its properties in Central and Eastern Europe. Meantime the value of Immoeast rose more than the one of Immofinanz . So today Immoeast has 54 percent bigger than Immofinanz.

So the Immofinanz’s activity develops in Austria, Germany, Italy and Switzerland, while most of Immoeast’s real estate is in Romania, the Czech Republic, Slovakia, Hungary and Poland. Romania is the country with the biggest weight in the Immoeast’s activity, over 30,5%, and in our country the fund is the most important investor. Together, the real estate of those two was valued at about 18 billion euros, according to the last report of Immofinanz.

“Property values in Eastern Europe fell during the last reporting period, while increasing in Germany, Austria and Switzerland. Immofinanz would benefit from a merger, but Immoeast wouldn’t gain any particular advantage from it, “said Roman Herzog, an analyst at Raiffeisen Centrobank in Vienna. Both companies are listed at Vienna’s Stock Exchange. This year the value of the Immofinanz stocks has fallen 14 percent in Vienna, while Immoeast has dropped 32 percent. Beside that they have the same CEA, Immofinanz and Immoeast have also the same CFO, Christian Thornton. If those two funds will merge, the value of the properties owned by the new company would be of about 15 billion euro. “A merger would make sense. However, Immofinanz doesn’t have the cash to buy Immoeast, so I don’t really see this happening anytime soon’’, said Alex Hodosi, an analyst at UniCredit.