On Friday, S IMMO announced that the company will part ways with board member Herwig Teufelsdorfer with immediate effect. At the same time the supervisory board decided to appoint Tomáš Salajka to the board, who is also member of the Board of Directors of CPI Property Group (CPI), S IMMOs majority shareholder.  This comes after the company already parted ways with former board member Holger Schmidtmayr in June. Like Mr Teufelsdorfer, Mr Schmidtmayer was replaced with a person closely associated with CPI: Radka Döhring. After Ms Döhring acted as Finance Director at CPI from 2012-2014, she was announced as member of the board at IMMOFINANZ just two months after CPI gained voting rights majority at the company.  

With this, Radovan Vitek, founder, and majority shareholder (90.3% of voting rights) of CPI, is seemingly implementing full operating control over S IMMO and IMMOFINANZ, after acquiring majority stakes (88.4% in SPI & 77% in IIA) in 2022. Mind you, S IMMO also has 4.44% treasury shares. The cancellation of which would lift CPI above the 90% squeeze-out threshold. Moreover, S IMMO is currently running the second consecutive quarterly share buyback (0.25% of targeted 1% bought back in Q4), hence lowering the number of shares CPI would have to acquire at a higher price in the event of a squeeze out.

Although a delisting would be sensible at first glance, considering the current dual listing on the Vienna Stock Exchange (S IMMO & IMMOFINANZ) as well as facilitation with regards to related-party-transactions, the following questions arise: When and why not so far? While the question of when is difficult to answer, one possible answer to the question of why it has not happened yet is that CPI would have to pay a significant premium to the current share price given the NTA of € 25.16 as well as the € 19.50 per share, which IMMOFINANZ paid to acquire a 50% S IMMO stake from CPI in Q4 ‘22. Given CPIs high leverage (>50% LTV) as well as the short attack by hedgefond Muddy Waters it is hence uncertain if the company is currently willing to pay an additional € 100m (eNuW) for the remaining S IMMO share.

Yet, this brings us to the crucial point:  Despite best-in-class metrics, the incipient recovery of the real estate market and the looming squeeze-out possibility, shares are trading on an NTA-discount similar to the peer group (-41% as of yesterday’s close price), which we regard highly unjustified. The stock hence remains a strong BUY with a new PT of € 18.40 based on NTA and DDM.