Following the purchase of Constantia Privatbank's real estate division – provided that consent is given at the extraordinary general meeting on 23 July 2008 (IMMOFINANZ) and 25 July 2008 (IMMOEAST) – IMMOEAST and IMMOFINANZ will have a second pillar in the form of real estate services, complementing their core business area of investments in real estate, real estate holdings and real estate firms. The IMMOFINANZ group will thus become an integrated real estate enterprise with a corporate and earnings structure that will clearly set it apart from other publicly listed real estate firms in Europe.

The companies and departments that make up Constantia Privatbank's real estate division will be demerged to form a new corporation, I&I Real Estate Asset Management AG (I&I). This company will become an affiliated company of Constantia Privatbank and the two companies will be sold separately within the scope of the current sales process.

The purchase price was based on an appraisal by Ernst & Young. Only the fixed portion of the management fee was used to calculate the value of the management contract, performance fees that could have been due over the coming years were not taken into account.

As IMMOFINANZ and IMMOEAST's management contracts are also handled by the real estate asset management division which will be integrated in I&I, the purchase also brings about the envisaged internalisation of management, and earnings from the management contracts will currently be distributed entirely among IMMOFINANZ and IMMOEAST.

The purchase price for the respective management contracts is EUR 146 m for IMMOFINANZ and EUR 219 m for IMMOEAST. On average, this is around 4.2 times the management fees of EUR 87 m for the 2007/08 business year. The stakes of IMMOFINANZ and IMMOEAST in the joint subsidiary are proportionate to the size of their respective real estate portfolios. IMMOFINANZ will therefore will hold a 40 percent stake and IMMOEAST a 60 percent stake.

This purchase price is significantly lower than the values cited recently in the media or forecast by various investment banks. The purchase prices are also extremely moderate in comparison to the cost of internalising management at other real estate enterprises.

The purchase price for Constantia Privatbank's real estate subsidiaries and other real estate activities is EUR 75 m, of which EUR 30 m are to be paid by IMMOFINANZ and EUR 45 m by IMMOEAST.

The purchase provides immediate opportunities for savings and profits. EBITDA is expected to rise by EUR 80 m to EUR 100 m in the first full business year following the purchase of Constantia Privatbank's real estate division. Earnings per share will rise EUR 0.11 to 0.14 in the wake of the transaction; the cash flow per share is set to increase by EUR 0.17 to 0.20. Earnings per share at IMMOEAST will rise by EUR 0.06 to 0.07, cash flow per share by EUR 0.10 to 0.12.

Furthermore, the profits of the real estate division are growing strongly; the coming years should therefore see significantly higher earnings.

“The acquisition of Constantia Privatbank's real estate division, which is both profitable and growing strongly, is a golden opportunity for IMMOFINANZ and IMMOEAST”, says Karl Petrikovics, CEO at IMMOFINANZ and IMMOEAST. “We will become the only large listed European real estate company to cover the full value added chain spanning all sub-areas of the real estate business.”

IMMOFINANZ’s core business, real estate asset management, will be expanded significantly. I&I will provide an asset management platform for IMMOFINANZ and IMMOEAST as well as for open-ended real estate funds, closed-ended real estate funds and other private or institutional real estate investors. All other real estate services will be provided by several former subsidiaries of Constantia Privatbank CPB Immobilientreuhand: real estate brokerage and valuation; IMV Immobilienverwaltung und Management: property and facility management; CPB Immobilien KAG: real estate funds; Constantia Immobilien Development and CREDO Real Estate: real estate development).

I&I will have approx. 600 employees.

“The real estate services will become an important source of income”, says Petrikovics. “The IMMOFINANZ group will become significantly more profitable and service fees will also contribute to the stabilisation of the group's performance.”

On the other hand, I&I and its subsidiaries will also profit from being incorporated into the IMMOFINANZ group. A strong financial base and the long-lasting contacts of IMMOFINANZ and IMMOEAST with potential customers open new growth opportunities for the various real estate service providers in the group. Interest is especially focussed on the markets in Central, Eastern and Southeastern Europe, Russia and the Ukraine. IMMOEAST and IMMOFINANZ will in future be the only group to cover comprehensive real estate services and real estate investment vehicles throughout the entire region. “With the quality of real estate services in the region often still sub-standard, IMMOFINANZ's capacity to cover all real estate services will make it particularly attractive, for example, as a fund manager”, says Petrikovics.