Eastward advances
This year the Warsaw Stock Exchange is proving attracting for developers not only from Poland, but also from Austria, with Warimpex entering the floor at the end of January. Now another Austrian developer plans to do the same. Immoeast, one of the largest developers in the CEE region, has set May 25 as the date for its WSE debut.
"We operate in Eastern Europe but so far our shares have not been listed on a bourse in a country we operate in [there]. The WSE is the most attractive market in the region. We have chosen Poland because its capital market has very good prospects and is characterized by very good liquidity. Apart from that, over 17 percent of all our investments are based in Poland. The time has come to provide Polish investors with the opportunity to directly invest in Immoeast," says Karl Petricovics, Immoeast's president.
Double listing
Already listed on the Vienna Stock Exchange, Immoeast will issue up to 277.9 million shares on the WSE, directed at investors from Poland, Austria, Germany, Slovakia and the Czech Republic, as well as the United States as a private placement. The price of the shares won't be higher than R12 (zł.47.30), but their final value won't be established until May 22.
Immoeast plans to raise some R3-3.3 (zł.11.3-12.5) billion, which will be spent on a new investment plan. "The perspective is very promising. In Warsaw, it is relatively easy to raise money from the market," says Michał Rokosz, an analyst from CB Richard Ellis.
The financial position of the company will help it implement its strategy. "We will be three times bigger than Globe Trade Center, seven to eight times bigger than Echo Investment and Dom Development," says Petricovics. Immoeast's capitalization will increase from the R6.2 (zł.23.4) billion at the end of March to R9.2 (zł.34.8) billion after its debut in Warsaw. It will be the fifth-largest company listed in Warsaw, and the largest developer.
Ambitious program
Immoeast's investment plan is ambitious, but the company has already proved it has no problem finding good projects. "Our program includes investments worth R6 [zł.22.7] billion in the financial year 2007/2008," says Petricovics.
According to the CEO, 31 investments worth R1.4 (zł.5.3) billion, which are part of the program, were already realized in the last quarter of the previous financial year, which ended in April 2007. This investment program is being completed very quickly, just like the previous investment plan, worth R5 (zł.18.9) billion. "The supervisory board has already accepted the next investments, whose value totals about R2.6 (zł.9.8) billion. Other investments worth about R2 [zł.7.6] billion have been approved by the board and will soon be sent to the supervisory board," says Petricovics.
Once the new investment program has been completed, the value of Immoeast's portfolio will increase from R7.2 (zł.27.2) billion (as of the end of January 2007), to over R12 (zł.45.4) billion. Petricovics says that Immoeast is now ready to show investors how the company wants to invest the money, which proves that it operates a transparent business.
Immoeast invests in three types of projects: It acquires already existing buildings, completes its own developments, and engages in other projects as a minor shareholder. The company will increase its development projects, whose share will reach 66.2 percent of Immoeast's output. Acquisitions will amount to 24.9 percent and strategic partnerships to 8.9 percent. Commercial projects will constitute the lion's share of the company's activities - 61.1 percent. Of that, offices will account for 30.3 percent. Logistics and residential projects will take 5.2 and 3.5 percent, respectively.
New focus
According to Petricovics, over 66 percent of the R6-billion investment program will be invested in Southern and Eastern Europe (SEE). The SEE region's share will increase from the current 26 percent to 40 percent.
Maciej Wewiórski, an analyst from CDM Pekao, says that Bulgaria and Romania, as new EU member states, are excellent locations for investments. "Since the markets are young, there aren't any investment projects to be acquired, but the demand for retail centers and office space is increasing. These are markets which can generate huge profits for those who are able to find good locations," adds Wewiórski.
Key market
Petricovics says the remaining 33 percent of the R6-billion investment plan will go to the CEE region, including Poland, Hungary and the Czech Republic. Poland will remain a key market for Immoeast.
At the end of January 2007, Immoeast was the owner or co-owner of 58 properties in Poland. Their total space amounted to 1.96 million sqm. In the near future, the portfolio of Polish properties will grow from the current value of R1.2 (zł.4.5) billion to R1.5 (zł.5.7) billion. "I am sure Poland's share in the total portfolio will not drop below 10 percent," assures Petricovics.
Office opportunity
A recently-released report from the Warsaw Research Forum, that the amount of unoccupied office space in Warsaw is about two percent, compared to 13 percent a year ago. Increased demand has caused prices to rise from about R20 (zł.75.3) per sqm last year to some R25 (zł.94.2) now.
Immoeast has bought Mokotów Business Park and Brama Zachodnia, and is constructing its own Equator Office in Warsaw. These investments will contribute to the company's already growing revenues.
The firm has not yet published its official results for the 2006/2007 financial year, but estimates that revenues should exceed R200 (zł.757) million.
