Logicor has provided Immofinanz with an exit from the logistics property sector by acquiring the CEE investor's 1 million m2 portfolio valued at €536 mln.
Logicor has provided Immofinanz with an exit from the logistics property sector by acquiring the CEE investor's 1 million m2 portfolio valued at €536 mln.
PropertyEU first reported last month that Logicor - Blackstone’s European logistics arm - was in exclusivity to buy Immofinanz's logistics business.
The portfolio includes 36 completed assets offering 1 million m2 of rentable space in Germany (24 properties), Hungary (5), Romania (3), Poland (2), Slovakia (1) and Russia (1), as well as three development projects with 65,000 m2 currently under construction in Hamburg and in the Romanian cities of Bucharest and Ploiesti.
The final purchase price will be determined at closing based on the property value of €536 mln, less construction costs of around €28 mln for the development projects, which will be completed by Immofinanz.
Immofinanz said this value – which roughly represents the portfolio’s total carrying amount as of 31 July 2015 - confirms ‘the revaluation of the logistics properties during the 2014/15 financial year’.
Closing of the deal is expected to take place during the first quarter of 2016.
The Austrian property group confirmed in August that it was in talks to sell its logistics portfolio as part of a strategic reorientation to concentrate on the office and retail property sectors. Immofinanz entered the logistics business in 1991.
‘The sale of the logistics portfolio represents an important step to further simplify and optimise our portfolio structure and strengthen the focus on our core expertise in the retail and office segments,’ commented Immofinanz’s CEO Oliver Schumy.
Proceeds will be re-invested in the expansion of the company’s German portfolio, which is planned to grow to nearly 200,000 m2 of rentable space by mid-2018 after completion of the office development projects currently in progress, Schumy added.
Earnings hit by downturn in Russia
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.
A sale of the logistics portfolio had been on the cards since April this year when Immofinanz bundled its logistics assets under the new umbrella brand, LOG.IQ.
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.
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.
'Growth will be directed towards improving sustainable profitability and creating a more balanced portfolio distribution between Western and Eastern Europe,' the CEO recently 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.
Big players splash out on logistics
Blackstone is leading a string of US heavyweight investors which are splashing out on European logistics as consolidation continues to shape the sector. In October Blackstone's Logicor acquired a majority stake in Certeum, a company that owns and manages €900 mln of logistics and industrial real estate in Finland.
It is believed Blackstone paid about €290 mln for about 58% of Certeum, although full financial details of the two-stage transaction were not disclosed.
Similarly, CBRE Global Investment Partners (GIP) has just completed the acquisition of a €350 mln European logistics portfolio, comprising seven assets across France, Germany, the Netherlands and Spain.
The 600,000 m2 portfolio was bought from existing clients of TH Real Estate, which will continue to manage the portfolio on behalf of GIP while also seeking further acquisitions, primarily in markets such as France, Germany, Spain and Benelux. Investments into CEE will also be considered.