Fuengirola: evolución de su oferta hotelera

net asset value of about 40% – presumably because mixing different asset classes seemed less attractive to the capital markets than had been the case some years previously. Over the past months, this discount on BUWOG shares has already decreased considerably. Throughout the preparatory phase, we were also helped by the fact that BUWOG already had independent corporate structures in many respects. We quickly started building up our own resources for those administrative areas – such as IT or accounting – that were previously covered by IMMOFINANZ. In this respect, we have already made very good progress and will be able to cover all areas ourselves by the end of the financial year 2014/15 at the latest.

But isn’t IMMOFINANZ AG still the controlling shareholder of BUWOG AG?

RIEDL: No, you can’t really say that. Although IMMOFINANZ still owns a 49% stake in BUWOG AG, it has stated that it plans to reduce this interest over the medium term. Added to which, a de-domination

find transparent, fair and understandable answers to these questions – which I believe we have managed to do.

ROOS: The whole idea, after all, was to strictly separate the two companies to enable better use to be made of their respective advantages and market positions. Above all, though, BUWOG has also gained its own access to the capital markets as a result, which can only benefit a growth-oriented company such as BUWOG.

Are you satisfied with the share price performance of BUWOG so far?

ROOS: The shares’ first price in Frankfurt was EUR  13.00. By 31 July 2014, the price had risen to EUR  14.35, equivalent to an increase of 10.4% in just three months. The discount to EPRA NAV has already decreased to 16.6%. For us, this impressive performance is confirmation that the market has understood and accepted BUWOG’s strategy and business model. The next step is to reduce the

INTERVIEW WITH THE EXEcUTIVE BOARD

Ronald Roos, CFO, Daniel Riedl, CEO

What distinguishes BUWOG’s strategy and business model from those of other property companies? RIEDL: BUWOG’s foremost – and most valuable – USP lies in its broad value chain focusing on the residential sector in Germany and Austria. Our business is not restricted to buying and selling, or just letting. Compared with our peer group, our business model extends much further. In addition to conventionally letting existing apartments, our strategy in Austria is to sell between 450 and 500 individual apartments each year. These sales generally earn us a margin of around 50% on the stated fair value – which incidentally proves how very conservatively we approach the measurement of our assets on the balance sheet. We then invest the proceeds in project development, which constitutes the third pillar of our business model. About 80% of all newly built apartments are sold to private and institutional investors, with the remainder being added to BUWOG’s standing investment portfolio. And here we come full circle – after letting the apartments for several years, they are then also put up for sale. This cycle sets us clearly apart from our competitors.

How does the sale of the subsidiary BUWOG Facility Management fit into a strategy of having as deep a value chain as possible?

RIEDL: In order to interpret this sale correctly, it is important to note that BUWOG FM primarily

manages commercial property belonging to IMMOFINANZ. And this sector is not part of our core business. We continue to manage our portfolio with our own staff – and to manage residential property for third parties.

Which conditions govern the sale of apartments? ROOS: We have defined precise procedures for taking these decisions. We sell if the achievable sales price earns a higher yield than letting, and the property or apartment offers no further potential for value appreciation. Such decisions are, of course, preceded by thorough analysis. Are there options to raise the rent level, build loft extensions or make better use of other areas? But since around 39% of the annualised in-place rent of our current portfolio is accounted for by subsidised housing in Austria with statutory rent restrictions, the scope for raising rental income here is limited. Consequently, we have prepared, or are in the processing of preparing to sell

“BUWOG’S FOREMOST – AND MOST

VALUABLE – USp LIES IN ITS BROAD

VALUE cHAIN FOcUSING ON THE

RESIDENTIAL SEcTOR IN GERMANY

AND AUSTRIA.”

around half of our standing investment portfolio in Austria in the course of natural tenant fluctuation. We sold approx. 550 residential units in Austria through unit sale transactions in the 2013/14 financial year – which generated extremely good returns, as already mentioned. Approx. 1,700 units were sold through property or portfolio transactions.

RIEDL: We successfully sold some larger portfolios comprising a total of around 1,135 units in Upper Austria and Salzburg and 55 units in Carinthia during the reporting year. Measures such as these to streamline the portfolio constitute a key element in our strategy. We want to focus the BUWOG portfolio more strongly on the two capitals – Berlin and Vienna – as well as on selected state capitals and economically strong metropolitan areas.

Was that also why you acquired the DGAG portfolio? RIEDL: As already mentioned at the beginning, this acquisition marked a key milestone towards making BUWOG Group more attractive in the run-up to the flotation. By acquiring this portfolio of around 18,000 units, we have expanded our footprint in Germany to include economically strong regions in the North- West of the country. At the same time, we also took over the residential administration structures and resources from Prelios Deutschland. When this transaction is concluded at the beginning of July 2014, the BUWOG team will have grown by around 300 members of staff.

ROOS: We did not acquire a completely independent company from Prelios; we only took over the business units from their residential operation – such as administration, asset management and facility management. There is therefore no need to eliminate any duplications with already existing BUWOG units in Germany. From an operations point of view, however, a joint platform will emerge that will bring together all units – including those from earlier acquisitions. We should be there around the end of 2014, beginning of 2015.

“WE WANT TO FOcUS THE