CA IMMO: 500 MIO. € CASH FÜR INVESTMENTS
High added-value potential from district developments
Markets: reduction on yields for high-quality properties and increasing volume of transactions expected for 2010
After two difficult years for the property sector, CA Immo is going for organic growth. With an extensive project pipeline, Germany is the principal driving force behind the planned continuous build-up of assets in the years ahead. The strategy is building on high added value from district development, in particular, and on raising reserves in the property portfolio of CA Immo’s subsidiary, Vivico, in line with the market. In addition, CA Immo will be looking for investment opportunities in 2010 for additional individual purchases of leased office properties to further strengthen rental income.
Largest project development firm in Germany
The CA Immo Group currently has some 400,000 sqm of gross area with a total project volume of over one billion euro under construction. For CA Immo, these construction projects involve future investment costs amounting to around € 500 m, which are 100% covered by approved loans and equity capital. Over 80% of these development projects are located in Germany and the Group also holds central German property reserves valued at more than € 500 m. This means that CA Immo is the largest project development firm in Germany. Bruno Ettenauer, CEO of CA Immo says: “At present we are one of the few project developers able to realise our plans continuously in Germany. We are deliberately using counter-cyclical investments! From 2011 onwards, we will be bringing high-quality space on to the market at a time when the economy should be rising again and the demand for office space increasing.” Since space has been created only in very measured dimensions over the past few years in Germany as well, good market absorption can be anticipated for the years ahead.
Income producing properties: Record lettings in December 2009
The asset portfolio valued at about € 2.7 billion is a stable source of income for CA Immo that is constantly being optimised in line with the market situation. Despite various excursions into other forms of use, office property is quite clearly the focus for asset accumulation. In order to secure the stable returns from income producing properties on a long-term basis, active and timely renegotiation of expiring rental agreements are key for 2010. Wolfhard Fromwald, CA Immo CFO says: “Even in 2009 we paid very active attention to our tenants. And this was successful: in December 2009 alone we were able to sign rental agreements across the group covering 45,000 sqm, including a new lease in Warsaw and an extension of an agreement in Germany, each for areas of more than 15,000 sqm.”
Germany: From wasteland to integrated urban district
CA Immo holds valuable property reserves in the best central locations in Germany via its subsidiary, Vivico Real Estate. These extensive development sites are currently in various phases of project preparation and are to be rapidly developed to construction readiness in the next few years, after which they will either be sold to developers, built by the company itself for end investors or incorporated into the company’s own asset portfolio on completion. This type of district development from disused space with no development plan to a finished urban district involves high levels of added-value potential and is an ideal supplement to the stable basic operational business of stock property management. Dr. Ettenauer says: “Our development projects and urban districts are geared to sustainable and ongoing added value. In terms of our long-term growth strategy, we are able to develop areas and secure continuous returns depending on the market situation.”
Austria: Commerce and hotels
In Austria, the inner-city shopping centre Galleria Landstrasse will enter the second phase of revitalisation in 2010 and is expected to reopen in late autumn 2010. In addition, by 2011, hotels will be built on two CA Immo properties in Salzburg and Vienna for the Meininger hotel chain and subsequently let on a long-term basis.
Market outlook: lower returns, more transactions
The consequences of the unstable economic situation have been reflected across every property market in the form of sharp declines in transaction numbers, increasing yields and decreasing demand for office properties. For 2010, CA Immo anticipates that the investment market will start up again and that there will be lower yields on high-quality properties. “For premium office properties combining high quality with excellent locations and long rental agreement terms, we are seeing increasing competition on the part of investors”, says Fromwald. “In Frankfurt, for example, this has meant a slight drop in returns even at the end of 2009. Since many properties are currently on hold internationally, we expect good opportunities for added value for our current development projects in the years ahead.”
Polarisation in eastern Europe
There is a very wide range of opinions regarding further developments in eastern European business. If the stabilisation, emanating primarily from Germany, takes hold, rising rental prices can be expected since there is little on offer on the market and little is currently under development either. The extent to which returns will fall once more depends on the willingness of the banks to lend money. But since large amounts of cash are in circulation at the moment, the signs are good. Fromwald says: “Long-term fundamental conditions mean that eastern Europe is an attractive market.”
About CA Immo
CA Immo, which was founded in 1987, develops and invests in commercial real estate (with the emphasis on offices) in Austria and Germany, as well as eastern Europe through its subsidiary CA Immo International. CA Immo has consolidated its foothold on the German market in the past two years: as of 30 September 2009, Germany accounted for around 60 % of the total property assets of around € 3.7 bn. CA Immo acquired the Vivico Group – Germany’s leading urban district developer – at the end of 2007. CA Immo is listed on the Vienna Stock Exchange, with free float of around 90 % at the present time.
Please address any questions to:
CA Immobilien Anlagen AG
Tel.: +43 1532 5907 533
Wednesday, 27. January 2010 12:38