Last week, UBM announced the acquisition of a project on Vienna’s Handelskai from René Benko’s Signa Group. The transaction volume amounts to € 24.5m, which includes existing land financing.

UBM intends to develop a 113-metre office tower at the site, which is to be built in timber-hybrid construction. As things stand, the Donaumarina Tower would be the tallest timber skyscraper in the world. The tower, which is excellently located (15 minutes to reach airport & city center), is seen to have 32 upper and four underground floors with c. 45k sqm gross floor space. As usual for UBM and especially timber projects, the building will be fully compliant with the EU Taxonomy Regulations and ESG guidelines, which should make it an attractive target for investors.

With this, UBM has paved its path to become Europe’s leading developer of timber construction. Overall, the company should now have 310k sqm of timber construction in planning and development (eNuW), which looks set to become a significant competitive advantage given the carbon intensity of the sector, as investors are pressured to comply with the EU taxonomy.

Moreover, UBM announced the closing of the F.A.Z. Tower in Frankfurt, which was sold already in 2020 to HMG for € 196m. With the closing of the deal, UBM is expected to generate a cash inflow of c. € 20m (eNuW), which will still be attributable to Q2.

UBM also announced the intent to issue a green bond with a four-year-term and a 7% coupon. The issue volume is expected to total at least € 50m, with a possible increase to € 100m. The proceeds will be exclusively used to finance or refinance new or existing projects in accordance with UBM’s Green Finance Framework. Notably, an offer to exchange the company’s 2018-23 bond (3.125% coupon), which preceded the cash subscription period, was accepted by c. 25% of the bond holders, equalling a nominal value of € 29m. Against this backdrop, we expect the company to collect total proceeds in a range of € 70-80m (subscription period ends July 3^rd).

BUY with an unchanged PT of € 35.00 based on DDM.