CA Immo: Building rights for 1.6 m sqm gross surface area aimed for by 2014
• High added-value potential from district developments
• Reduced returns on high-quality properties expected in 2010 along with increasing volume of transactions
At the start of 2008, the property company CA Immo with investments in central Europe acquired the German Vivico Real Estate, formerly state-owned, with the aim of dynamic expansion of its German business. Two years on, numerous construction projects are under way and Germany, with an extensive project pipeline and additional site reserves worth about € 500 m, is the driving force behind the planned organic asset growth in the years ahead. The aim is to acquire building rights for gross surface area (GSA) amounting to about 1.6 m sqm on the German property reserves by 2014, with a current view to between 30 and 40% of this being dedicated to residential use. Once they are ready for construction, these properties will be either sold to developers, be built by the company itself for an end investor or will be incorporated on completion into the company's own asset portfolio.
Largest project developer in Germany
The CA Immo Group currently owns some 400,000 sqm gross surface area in its core regions of Germany, Austria and eastern Europe, with a total project volume of more than one billion euro under construction. Half of the investment costs have already been brought in and all the remaining construction costs, amounting to about € 500 m, are covered by loan commitments and equity capital. More than 80% of these development projects are accounted for by Germany, making the CA Immo Group the largest German project developer today. Dr. Bruno Ettenauer, CEO of CA Immo says: “We are currently one of the few project developers who are able to realise their plans in Germany. We are also deliberately backing anticyclical investments. From 2011 onwards we will be putting high-quality space on the market at a time when the economy should be starting to rise again and demand for offices should increase.” Since space has been created in only very small amounts on the German market over the past few years, good market absorption can be expected in the years ahead.
From wasteland to mixed-use urban district
The extensive, largely centrally located development areas of the CA Immo Group are at different project development stages. Residential and commercial areas (offices, hotels, retail, etc.) are interlinked within the framework of these mixed-use district developments so as to ensure a functional infrastructure that is well integrated into the surrounding area. Bernhard H. Hansen, CTO of CA Immo says: “Our mixed-use urban districts, like the Europaviertel in Frankfurt for example, or the Arnulfpark in Munich, are being developed and realised as a function of market conditions and pre-leasing levels and will secure continuous income for us. There is, of course, great political interest in these inner-city construction projects, and the local authorities are providing an open and proactive environment, particularly in today’s difficult economic climate – a clear win-win situation for everyone involved.“
Investments on a strong capital basis
CA Immo generates stable income from its asset portfolio, valued at some € 2.7 billion, and this supports the project business. In addition, sales amounting to over € 350 m were finalised in Germany alone in 2009, despite the difficult economic environment. At the start of the fourth quarter of 2009, CA Immo greatly strengthened its liquidity by means of the issue of a corporate bond amounting to € 150 m and a convertible bond with a volume of € 135 m. An equity ratio of about 41% and the fact that the maturity profile of its financing liabilities is on a long-term basis mean that CA Immo is a strong investor, able to realise major construction projects even in difficult economic periods.
Wolfhard Fromwald, CFO of CA Immo commented on this: “The experiences of the last 18 months have shown the vital importance of a well-balanced funding profile. We now have the necessary financial flexibility, both as regards the amount of liquid assets and also with respect to the maturity of financing liabilities, to be able to exploit investment opportunities that crop up in the current market phase.”
Market outlook for Germany: quality is the winning suit
The consequences of the unstable economic situation have been reflected right across every property market in the form of sharp reductions in numbers of transactions, increasing returns and decreasing demand for office properties. For 2010, CA Immo is expecting the investment market to start up again, along with decreasing returns on high-quality properties. “Increasing competition is developing on the part of investors for premium, high-quality office properties in outstanding locations and with long leases”, says Ettenauer. “In Frankfurt, for example, this has led to returns falling slightly even at the end of 2009. Since many projects are currently “on hold”, we expect to see good opportunities for utilisation of our current development projects in the years ahead.”
About CA Immo
CA Immo was founded in 1987 and develops and invests in commercial property (focusing on office properties) in Austria, Germany and also, via its subsidiary CA Immo International, in eastern Europe. Over the past two years, CA Immo has increasingly established itself on the German market. Some 60% of its current total property assets of about € 3.7 billion (as at 30.9.2009) are today located in Germany. At the turn of the year 2007/2008, CA Immo acquired the Vivico Group, the leading developer of urban districts in Germany. CA Immo is traded on the Vienna Stock Exchange and currently has free float of about 90%.
<link fileadmin pdf praesentation_pk_frankfurt_2010_website.pdf _blank download>Presentation of press conference, 18.02.10 (only in German)
Thursday, 18. February 2010 11:59