EUROPE NEWS: Secondaries sale at Immofinanz

The Austrian firm, which has been selling direct property investments in recent times, is now closing on a large portfolio of private equity real estate fund secondaries interests. PERE Magazine, April 2009 issue

In what is a traditionally clandestine segment of the industry, it is somehow satisfying when a sale of a large secondaries portfolio makes it into the public domain.

According to reports, the Austrian property group Immofinanz is offloading an €800 million portfolio of 28 interests in European and Asian funds through the corporate finance division of property services firm Jones Lang LaSalle in London.

Neither firm would comment, but the sale has generated plenty of interest in the marketplace.

People familiar with the matter told PERE that the fund interests are in vehicles managed by some of the largest and most admired firms in the industry, including MGPA.

According to reports, the Austrian property group Immofinanz is offloading an €800 million portfolio of 28 interests in European and Asian funds through the corporate finance division of property services firm Jones Lang LaSalle in London.

Simsbury, Connecticut-based Landmark Partners was also believed to have been involved in discussions with Immofinanz last year, the same source said, however the involvement of Jones Lang LaSalle opened up the potential field of buyers significantly.

Though for some investors time is in short supply in terms of performing due diligence on a large number of underlying fund interests, Immofinanz has managed to shortlist a handful of potential buyers and a deal could be concluded soon, according to sources.

The sale comes as Immofinanz continues to restructure following the loss of confidence of creditor banks. During the first half of 2008, the company racked up heavy losses as a result of downward valuations of its real estate portfolio and writedowns following the halting of development projects.

This year, Immofinanz announced the sale of one of its subsidiaries, ImmoAustria Immobilien Anlagen, for €1.4 billion to another subsidiary, Immoeast, in order to pay down debt.

ImmoAustria Immobilien owns all of the group's properties in Austria, including the Business Park Vienna. However, Immofinanz has yet to make a statement about its indirect property holdings.

LP advisors and secondaries specialists have warned for the past six months that large trades should be expected given the stresses some indirect property managers are facing.

INREV, the European Association for Investors in Unlisted Real Estate Vehicles, recently found that there were €1.1 billion of trades in European non-listed funds in 2008 – with a further €230 million to be completed soon.

Michael Siefert, who runs the European operation at US secondaries firm Madison International Realty, predicted there was much more yet to come. Due diligence though would be an issue. “Sometimes the cost of not doing a deal can be significant,” he added. “But frankly, we are seeing significant value corrections in this segment, which really makes us feel that could do deals.”