Immofinanz: will they, won’t they, when? (upgraded to HOLD)

Immofinanz’s shares have dropped by nearly 40% since the expiration of the CPI offer at the end of May. Trading at a c.50% discount to its EPRA NTA, the stock is likely trading below fair value – even when taking into account the weak profitability, the adverse macro outlook and the risk of write-downs ahead. That said, we now see Immofinanz as a special situation investment. The future actions of CPI matter more, in our view, than the underlying fundamentals. We believe CPI is, at some point, likely to try to fully acquire Immofinanz, merging the two companies together. That said, we believe that a repeat bid, at EUR 23/share, is unlikely, given the significant deterioration in the macro, which has taken place since the offer was submitted. CPI may be buying on the market currently. That said, we do not know, as the next reporting threshold – 90% – also marks a squeeze out. We do not believe that CPI is likely to reach 90% sooner than from June 2023E-onwards, as it would have to pay EUR 23/share to the remaining shareholders otherwise. We maintain our forecasts, and upgrade the stock to a HOLD. We believe that the shareholders who did not sell into the CPI offer may wait for a follow-on offer, or a squeeze out, which could be priced higher than the current share price, but likely below the original offer price. On the other hand, the timing and likelihood of such an offer are unclear, and the shares could prove a value trap; hence, we are hesitant to recommend to buy on the dip, although we agree that the stock looks fairly inexpensive at the current levels. We set our new 12M PT at EUR 15.8/share, down from EUR 16.0, with the adjustment driven by the broader market sell-off in the past month, affecting our peer valuation.