Wednesday, October 15, 2008

Immoeast's capitalisation drops to 800 million euros, fund plans property sale

Austrian investment fund Immoeast, the top buyer of real estate assets in Romania in recent years, will start selling some of these assets on the Romanian market, where it owns properties that were assessed at 3.4 billion euros at the end of June.

The capitalisation of Immoeast on the Vienna Stock Exchange reached approximately 800 million euros, down 87% from the same time last year when the market value of the company exceeded six billion euros.

At the same time, the market value of the properties held by the fund was valued at 10.9 billion euros at the end of June, that is in the first financial quarter of the company.

"After years of dynamic expansion, the group's focus will shift towards consolidation and modification of financial structures. Moreover, we will focus on steps to ensure liquidity by slashing the number of development projects and by the sale of other properties in our portfolio," said Thomas Kleibl, the new spokesman of Immoeast's board of directors, who replaced Karl Petrikovics at the helm of the fund.

Properties are to be sold in Romania, too, sources on the real estate market say, with this country being Immoeast's most important market and accounting for 31.6% of its entire portfolio. After the decline on the stock market, Immoeast has reduced its chances of raising cash from the capital market.

The company's debts amounted to 1.64 billion euros at the end of July, and average repayment term was 5.2 years. The banks Immoeast worked with to finance its investments include Erste Bank, Raiffeisen (RZB), Bank Austria Creditanstalt, Hypo Real Estate and Investkredit.

The most important operational properties that Immoeast holds in Romania include IRIDE, S-Park and Victoria Park business parks, Bucharest Airport Tower and Bucharest Corporate Center office buildings in Bucharest, several shopping complexes - Polus Center in Cluj, Armonia Center in Arad and Euromall Pitesti and a number of logistics centres. The company also owns interests in a number of real estate development companies that operate in Romania, as well, such as Adama Holding, TriGranit and Caterata and has several properties in development under a forward-purchase contract, such as the World Trade Center project in Constanta, Gold Plaza shopping complex in Baia Mare and Euromall Galati.

Real estate companies are being badly hurt by the international financial crisis, all the more so if they are listed on capital markets, considering the negative trend of the stock markets over the last few months.



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