Immofinanz to spend EUR 163 m on Hungarian mall multiplication

Center Invest International Kft., is set to open two shopping malls this year in Miskolc (summer) and Debrecen (November) and two other next year in Gödöllő (end-August) and Kaposvár (end-September), business daily Napi Gazdaság reported on Friday.

Center Invest opened its first shopping park, "Stop.Shop Hűvösvölgy", in August 2002 in Budapest's 2nd district. Two further malls followed in Budapest, and three other were opened in Érd, Nyíregyháza and Veszprém. The company spent a total of HUF 25 bn on these six units.

Center Invest was taken over by Immofinanz in 2005 from Austrian private investors.

In the future the company would build "Stop.Shop." malls in Békéscsaba, Gyöngyös, Nagykanizsa and Keszthely.

Over the coming years Immoeast plans to develop an extensive network of regional shopping centres in the new EU countries like Romania and other markets such as Ukraine.

“Under the name “Stop.Shop.", roughly 100 shopping centres with 5,000 to 15,000 sqm of space will be built in accordance with a standard format," the company said in its latest interim report on Q1-Q3 FY2006/07 ended 31 Jan. The preferred locations are mid-sized cities with a population of 30,000 to 150,000, as well as the outlying districts and areas surrounding major urban centres.

It noted the start of the development programme was hugely successful: 11 shopping centres were opened in Hungary, Slovakia and Slovenia, and are fully let to the last square metre. “By the end of 2007 a further seven facilities will open in the Czech Republic, six in Slovakia and five in Hungary. Major retail chains have already reserved almost the entire available space," it projected.

Budapest projects

Immoeast acquired the Central Business Center, located at a prime site in Budapest, in January 2007. CBC has 13,270 sqm of letable space and its tenants include numerous well-known companies such as Helikon, Whitestone and 3E as well as the Norwegian embassy.

Construction on the first section of the Mester Business Park in Budapest is scheduled for completion at the end of May 2007. Marketing activities for the 12,000-sqm of office and warehouse space have already started.

One of the key tenants will be Johnson Controls, and negotiations are proceeding with other interested parties. Immoeast increased its stake in this property to 75% from 45% during the third quarter of 2006/07 and thereby took over majority control of one of the largest office development projects in this city. The site covers 20 hectares, which are located close to the city centre. Over a period of eight years, 250,000 sqm of letable space will be built in a number of stages. The business park also includes offices, warehouse and shopping areas as well as a hotel and apartments.

Immofinanz in brief

Immofinanz, founded in 1990, trades in the Prime Market segment of the Vienna Stock Exchange, and is one of the largest property companies on the European continent. Its shares are held entirely in free float.

The group has been able to generate an annual return of 12.85% after tax for shareholders over the past 10 years.

As of 31 January 2007, the group held a portfolio of 2,442 properties, with 9.93 million square metres of letable space equalling EUR 13.28 billion. Its investment stood at EUR 1.07 bn after the reporting period and its market cap was EUR 5.51 bn.

Q1-Q3 results

Immofinanz boosted is operating profit by 49.7% yr/yr to EUR 464.5 million from EUR 310.2 mn in the first three quarters of the current fiscal year. Earnings before tax rose almost as much with an increase of 44.1%, reaching EUR 447.9 mm.

Gross cash flow improved by 51.7% to EUR 139.4 m from EUR 91.9 m. The net asset value per share also went up 29.4% to EUR 11.53, partly due the solid performance of Immoeast's share price.

Revenues rose 32.2% yr/yr to EUR 375.3 mn. “This is remarkable above all because it was achieved in spite of the considerable expansion in the share of investments in development projects, with which revenues can only be generated in subsequent periods," Immofinanz said in its earnings report.

The growth of the real estate portfolio was even more substantial, with fair value more than doubling with an increase of 104.2%. The fair value of the portfolio had already reached EUR 13.3 billion at the end of the third quarter, up from EUR 6.5 bn.

For the overall year Chairman Karl Petrikovics expects revenues to reach EUR 600 m, thereby achieving growth of 50% compared to the 2005/06 business year.

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