Tuesday, September 22, 2009

Immoeast to Sell Assets in Romania, May Dispose of Moscow Mall

By Peter Woodifield

Sept. 22 (Bloomberg) -- Immoeast AG, Austria’s largest real estate developer, will dispose of assets in Romania and may sell a Moscow mall to reduce dependence on those markets, according to Chief Executive Officer Eduard Zehetner.“We are over-invested in certain countries like Romania or shopping centers in Moscow,” Zehetner, 58, said in an interview in Amsterdam last week. “We are not forced sellers and we are going to sell to restructure our portfolio into what we want.”

The property market in Romania, Immoeast’s biggest in central and southeast Europe, has been hit harder by the global financial crisis than anywhere else in the region, the Vienna- based company said in its annual report.

In Russia, it has become more difficult to finance new shopping centers and tenants have been hurt by the ruble’s decline against the dollar, it said.Immoeast will open Europe’s largest mall, the Golden Babylon Rostokino shopping center, in Moscow on Nov. 18. Tenants of the 241,000 square-meter (2.59 million square-foot) complex include Zara, a unit of Inditex SA, the world’s largest clothing retailer, and Hennes & Mauritz AB, Europe’s second-largest clothes seller.The company will open a fifth shopping center, to be known as the GoodZone mall, in Moscow next year and then decide whether to sell one, Zehetner said.“We may sell more than budgeted as we are getting offers for more than we expected,” he said on Sept 16. “We have certain constraints. We don’t want to lose money in terms of the initial investment.”

Romanian Assets

In Romania, the company had 72 properties and assets totaling 750 million euros ($1.1 billion) as of April 30. That’s about 13 percent of the company’s assets. Immoeast is developing three malls with 114,500 square meters of space due to open in the country next year.The proportion of Immoeast’s portfolio in Romania is relatively high, saidGernot Jany, an analyst at Erste Group Bank AG in Vienna, who recommends investors buy the shares.“Selling assets in Romania could make sense if it is good for cash flow and they can invest the money better elsewhere,” said Jany. “Maybe it makes some sense to sell some finished properties and invest in their development pipeline.”

Immoeast, 55 percent owned by Immofinanz AG, is the best performer on theVienna exchange this year. The stock has climbed more than eightfold, giving the company a market value of 3.1 billion euros.

Editors: Ross Larsen, Andrew Blackman.To contact the reporter on this story: Peter Woodifield in Edinburgh atpwoodifield@bloomberg.net.

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