Active portfolio management
The “collecting” phase begins right after the acquisition. This point marks the start of the real work for the IMMOFINANZ asset management team. Here the magic word is “active management”. It includes the search for the best way to use a property – for example, would the rental as office space instead of apartments or shops instead of offices bring a higher return – or can the expansion and rental of the attic floor or creation of garden areas add to the value of a property? In many cases, modernisation can also lead to an improvement in value. And then there are a wide variety of less dramatic measures that can also increase the income generated by an object, ranging up to the sale of advertising space on facades or roofs.
Last but not least, active management means identifying and taking advantage of the right time to sell an object. Of course, the most important goal of a property company is to build up a large, widely diversified portfolio with high earning power, and steadily expand this portfolio where good opportunities arise. But when market trends are particularly favourable, a sale can be the best of all alternatives. A good example of such a decision is the Europe Tower. When this 34,500 sqm building at a prime site in Budapest was acquired in autumn 2004, plans called for it to become the new IMMOFINANZ flagship in Hungary. However, the outcome was different: high demand led to the full rental of the Europe Tower before completion, and the object was sold as a forward purchase at a high profit.
The apartment house market in Vienna currently presents a similar picture. In recent years IMMOFINANZ has compiled a highly attractive portfolio of residential buildings at good locations throughout Vienna. The original plans indicated that these properties would be held and managed as long-term projects, but the development of the market has been even better than expected in recent years – and for that reason, IMMOFINANZ decided to take advantage of the extraordinary price level and sell off numerous objects at returns that would have been impossible to forecast at the start of these investments.
A pleasant side-effect from the sale of properties is that the prices realised on the marketplace can be used as an indicator to determine whether the valuation of the property portfolio is realistic. And here the results are crystal clear: the prices for properties sold in 2005/06 were 20% higher than the fair values estimated by IMMOFINANZ or the external valuation experts.
Last but not least, active management means identifying and taking advantage of the right time to sell an object. Of course, the most important goal of a property company is to build up a large, widely diversified portfolio with high earning power, and steadily expand this portfolio where good opportunities arise. But when market trends are particularly favourable, a sale can be the best of all alternatives. A good example of such a decision is the Europe Tower. When this 34,500 sqm building at a prime site in Budapest was acquired in autumn 2004, plans called for it to become the new IMMOFINANZ flagship in Hungary. However, the outcome was different: high demand led to the full rental of the Europe Tower before completion, and the object was sold as a forward purchase at a high profit.
The apartment house market in Vienna currently presents a similar picture. In recent years IMMOFINANZ has compiled a highly attractive portfolio of residential buildings at good locations throughout Vienna. The original plans indicated that these properties would be held and managed as long-term projects, but the development of the market has been even better than expected in recent years – and for that reason, IMMOFINANZ decided to take advantage of the extraordinary price level and sell off numerous objects at returns that would have been impossible to forecast at the start of these investments.
A pleasant side-effect from the sale of properties is that the prices realised on the marketplace can be used as an indicator to determine whether the valuation of the property portfolio is realistic. And here the results are crystal clear: the prices for properties sold in 2005/06 were 20% higher than the fair values estimated by IMMOFINANZ or the external valuation experts.
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