CPI Europe AG — M&A Activity 2017

Nov 13, 2017

DGAP-Ad-hoc: IMMOFINANZAG/ Keyword(s):Real Estate/Disposal IMMOFINANZsells retail portfolio Moscowto the FORTGroup

13-Nov-2017 / 10:06 CET/CEST

Disclosure of an inside information acc. toArticle 17 MAR, transmitted byDGAP- a service of EQSGroupAG. The issuer is solelyresponsible for the content of this announcement.

• Purchase contract signed, closingexpectedbythe endof December 2017
• The FORTGroupis acquiringthe entire retail portfolioinMoscow fromIMMOFINANZina share deal
• Nofurther reductionof liquiditythroughequitycontributions for the Russianportfolio
• The purchase price for the gross assets, includingthe financial liabilities, totals uptoapprox. EUR901 millionandrepresents a purchase price of uptoapprox. EUR226 millionfor the net assets
• Expecteddeconsolidationeffect of approx. EUR-169 milliononGroupequity,respectivelyEUR-0.15 onEPRANAVper share (basis:values as of 30 June 2017);upside fromearn-outs andtax reimbursements of uptoapprox. EUR151 million

The Executive Board and the SupervisoryBoard of IMMOFINANZAGtodayapproved the sale of the entire retail portfolio in Moscowto the Russian FORTGroup. The FORTGroup is a keyplayer on the retail market in St. Petersburg and,with this acquisition,will nowextend its activities to Moscow. The transaction is the result of a multi-stage, structured sale process byIMMOFINANZ. The purchase contractwas signed today, and the closing is expected bythe end ofDecember 2017 contingent upon fulfilment of customaryclosing conditions. These conditions include the refinancing of the portfolio bythe FORTGroup.

The object of the sale is theAustrian holding companythat contains all of the investments in the propertycompanies which hold the retail portfolio in Moscow. The transaction is taking place as a share deal and will transfer all of the assets held for sale (as of 30 June 2017: EUR1,068 million) and all of the liabilities held for sale (per 30 June 2017: EUR822 million) in the retail portfolio Moscowto the FORT Group. The included propertyassets total EUR976 million. In addition, the FORTGroup will also take over a Russian pure land-owning company(investment propertyas of 30 June 2017: EUR4 million). The net assets covered bythe sale totalled EUR250 million as of 30 June 2017.

The purchase price for the gross assets, including financial liabilities of EUR675 million as of 30 June 2017, totals up to approximately EUR901 million converted from Rubels. The purchase price for the net assets, converted from Rubels, totals up to approximatelyEUR 226 million (RUB15 billion; nominal amounts in RUBconverted at an EUR/RUBexchange rate of 66.2425 as of 30 June 2017). Included here is an amount of EUR14.5 million which is deferred and guaranteed up to January2022 as well as an earn-out of up to RUB9 billion (approx. EUR136 million) which is also due in 2022, but is based on the revenues of the shopping centers in 2021.

Strategy-basedtransaction

The Russian retail portfolio is characterised bydifferent market dynamics and has a higher risk profile than the rest of the IMMOFINANZ portfolio."The ongoing difficult market environment in Russia has had a substantial negative effect on theGroup's financial and earnings position during the past financial years.As previouslyannounced,we are nowselling the retail properties in Russia in line with our corporate strategy. This transaction will immediatelyrecover equityand significantlyreduce our financial liabilities and average financing costs. Moreover, the sale will eliminate anyfurther burden on the liquiditythrough equitycontributions for the retail portfolio in Russia", commentedOliver Schumy,CEOof IMMOFINANZ, on the transaction."IMMOFINANZcan nowconcentrate on further growth to become one of the largest players on the commercial propertymarket in Europe."

The retail portfolio Moscowhad a loan-to-value ratio of 69.1%as of 30 June 2017. In the event of a spin-off or further retention of this retail portfolio byIMMOFINANZ, liquidityoutflows of roughlyEUR250 million would have been required for debt service and the implementation of a repositioning programme for the shopping centers.

Expectedeffect onearnings

The earnings potential from the revenue-based earn-out of up to RUB9 billion (converted: approx. EUR136 million) can most likelynot be recognised as of the sale date and therefore represents an upside in the form of an undisclosed reserve. IMMOFINANZwill also participate with up to

RUB1 billion (converted: approx. EUR15 million) in the positive outcome of taxrefund proceedings which are current in progress and should be concluded bythe end of 2018. Based on the carrying amounts as of 30 June 2017, the deconsolidation can therefore be expected to result in an earnings effect of approximatelyEUR-169 million. It is attributable, above all, to historical goodwill (EUR-58 million) and investment properties (EUR-111 million, including deferred taxes).

Since the Ruble (RUB) is the functional currencyfor the retail portfolio Moscow, the closing will also result in the reclassification to the income statement of accumulated historical differences from foreign currencytranslation. These differences were recognised under other comprehensive income (OCI), i.e. de facto directlyin equity, in previous years in accordance with IAS21 and equal approximatelyEUR-533 million*. This reclassification has no effect on cash and will not reduceGroup equityor the EPRANAVwhen the sale closes. The negative foreign exchange differences result from the market entryin Russia at a time when, based on the current EUR/RUBexchange rate, the Ruble was much stronger.

The deconsolidation of the retail portfolio in Moscowis expected to have an effect of EUR-0.15 on EPRANAVper share, as seen from the viewpoint on 30 June 2017. Plans for the 2017 financial year still include the distribution of a dividend of EUR0.06 per share.

*See the half-year financial report 2017, pages 59 and 68ff (as well as OCI from a Russian pure land-owning company)

OnIMMOFINANZ

IMMOFINANZis a commercial real estate group whose activities are focused on the retail and office segments of seven core markets in Europe: Austria,Germany,Czech Republic, Slovakia,Hungary,Romania and Poland. The core business covers the management and the development of properties,whereby the STOPSHOP(retail), VIVO! (retail) and myhive (office) brands represent strong focal points that stand for quality and service. The real estate portfolio has a value of approx. EUR4.1 billion and covers more than 240 properties. IMMOFINANZis listed on the stock exchanges in Vienna (leading ATXindex) and Warsaw. Further information under: http:/www.immofinanz.com

For additional contact informationcontact:

Bettina Schragl Head ofCorporate Communications and Investor Relations IMMOFINANZ T+43 (0)1 88 090 2290

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Language:	English
Company:	IMMOFINANZAG
	Wienerbergstraße 11
	1100 Wien
	Austria
Phone:	+43 (0) 1 88090 - 2290
Fax:	+43 (0) 1 88090 - 8290
E-mail:	investor@immofinanz.com
Internet:	http://www.immofinanz.com
ISIN:	AT0000809058
WKN:	911064
Listed:	Regulated Unofficial Market in Berlin, Munich, Stuttgart;Open Market in Frankfurt; Warschau, Wien (Amtlicher Handel /Official Market)

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