Fresh from a buying spree which has made CPI Property Group SA one of Europe’s largest real-estate investors, the landlord is now looking to cut debt through selling some of its property.
(Bloomberg) — Fresh from a buying spree which has made CPI Property Group SA one of Europe’s largest real-estate investors, the landlord is now looking to cut debt through selling some of its property.
The company owned by Czech billionaire Radovan Vitek plans asset sales of “significantly more” than 2 billion euros ($2 billion) — roughly a 10th of its property portfolio — over the next two years, according to Chief Financial Officer David Greenbaum.
The plan should include disposals at recently-acquired Austrian companies Immofinanz AG and S Immo AG. Those transactions ended years of acrimony among the Vienna-based landlords by unwinding cross-ownership and voting limitations, making the real-estate more appealing.
The sale pipeline “can be easily expanded” because of the variety and the size of the portfolio, Greenbaum said in an interview, referring to 889 commercial properties and more than 16,000 apartments.
“We are not reliant on any particular asset, market, sector, or investor and can be extremely choosy about the pricing,” the CFO said.
CPIPG forecasts its net loan-to-value ratio to peak in the third quarter after rising to 44.8% in June from 35.7% a year earlier. The landlord seeks to cut the measure back below its soft ceiling of 40%.
The company is “committed to deleveraging” but faces no urgent need for any disposals or financing because it has “significant liquidity” and has extended acquisition bridge loans until the first half of 2025, Greenbaum said.
“There’s a bit of a mismatch between our purchases and our sales and the leverage is a bit higher than we would like,” he said. “We have a very clear plan to address it.”
Turbulent Markets
Following years of increasing property valuations, the company now needs to navigate the challenging environment of rising interest rates and turbulent financial markets.
The landlord also plans to streamline operations after buying 77% of Immofinanz this year. It has also built a 79% stake in S Immo with a purchase offer still open to shareholders until November.
Building the holdings involved a year of deal-making, including buying stakes from Germany’s Aggregate Holdings, convincing activist investor Petrus Advisers to sell shares and winning over boards and shareholders.
CPIPG has taken over managing assets at Immofinanz and may announce a similar step at S Immo. A larger size makes it easier for the company to fund itself, according to its executives.
There are still prospects of ruptures with remaining shareholders that have been reluctant to sell their stakes in the Austrian landlords. The new owner has blocked a dividend payment at Immofinanz and its takeover has triggered bond clauses that forced both companies to buy back bonds, siphoning cash away from new investments. CPIPG is set to change S Immo’s supervisory board next week, tightening its grip on the company.
Amid a general downturn in European real-estate stocks, Immofinanz shares have lost more than a quarter of their value since CPIPG’s offer expired.
“Of course, we will be a very decisive shareholder,” Chief Executive Officer Martin Nemecek said in the same interview. “We will set the strategy, but always having in mind the interest of minority shareholders.”
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
