Foto: Crestcom.cz

The contract for the merger was signed in December 2009 and it will be retroactive from April 30, 2009. It involves a share swap deal of three Immofinanz shares for two Immoeast shares. The goal of the merger is a reduction in costs and improved efficiency within the group, as well as improved transparency and corporate governance. Furthermore, Immofinanz will increase its share capital by up to €589 million and will issue up to 567.4 million new shares to the minority shareholders of Immoeast, giving Immoeast shareholders 54 percent of the newly formed company. It was also decided by the respective boards to spin off Immoeast’s business operations and its shareholdings by downstream merger into the recently established IMBEA Immoeast Beteiligungsverwaltung, a 100 percent subsidiary of Immoeast.

“This merger creates one of the 10 largest real estate companies in the world and one of the three leading real estate enterprises in Central and Eastern Europe,” said Eduard Zehetner, CEO of Immoeast and Immofinanz. Immoeast suffered significant losses in 2008 and ‘09 as the global financial crisis sent the values of it CEE properties spiraling. The company’s reorganization plan was presented by Zehetner to Immofinanz early in 2009 with the aim of improving its balance sheet, repaying a €512 million investment in corporate bonds as well as resolving a €1.8 billion loan Immofinanz took from Immoeast.

With Immoeast’s shares trading 44 percent below its net asset value (NAV) there is considerable room for share prices to grow compared to its more highly valued Western counterparts. So far the restructuring moves have been greeted with approval, and Immoeast proved to be the leading gainer on the Dow Jones Stoxx 600 Index with an increase of around 737 percent. Further restructuring moves expected by the company include lowering their exposure to Russian and Romanian retail. Immoeast’s properties in the Czech Republic include the Prague Westpoint Distribution Park, Prague Diamond Point Offices (pictured), Prague Airport Business Center Offices and Prague Park Hostivař Offices. In December the company finalized a long-term lease extension in its Vinice office property in Prague with British mobile communication group Vodafone Czech Republic for 20,000 square meters of office space. “The Immoeast Portfolio in the Czech Republic comprises 52 objects with a total value of approx. €719 million, including property under construction and inventories. This represents 9.5 percent of the total portfolio and makes the Czech Republic the third largest market for Immoeast in the business year 2008–09. For the merged Immofinanz the Czech Republic still is one of its core markets in the Eastern European region,” Zehetner told CBW.