S Immo AG

VSE:SPI

Earnings Call Transcript 2021-Q1

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the S IMMO AG conference call regarding the results of Q1 2021. [Operator Instructions]

Let me now turn the floor over to your host, Mr. Ettenauer. Please go ahead.

[Bruno Ettenauer, executive]

Thank you. Good afternoon, everybody. Welcome to the analyst call Q1 '21. Thank you for joining. With me are my colleagues, Herwig Teufelsdorfer, Friedrich Wachernig and Wilhelm Bayer. Now let's skip to Slide 4, which shows key drivers in the 3 areas operational performance, financial as well as transactions and capital market activities. As a general note, I would like to call to your attention that our operational figure for Q1, at least as last year were largely unaffected by COVID-19. This means that operationally, we are actually comparing pre-corona to corona numbers.

Having said that, S IMMO managed to largely confine the effects of the corona crisis to the hotel business, which obviously was impacted significantly by COVID-19, and is responsible for the reduction of our top line to EUR 43 million. However, rental income increased to EUR 32 million despite the crisis and is largely due to the quality of the portfolio and to our diligent handling of the crisis. Also our GOP from rental activity that is the GOP excluding the hotel GOP was even better than the last year, and came to EUR 24.5 million as opposed to EUR 24.2 million last year. Finally, our occupancy remained largely unchanged and came to 93.5%. Going to the financial section, our FFO I reached EUR 0.13 per share. This constitutes a decrease to prior year. That is basically attributable to the one thing only, namely the corona impact on our hotel business. Our property portfolio increased by about 5.1% year-on-year and came to nearly EUR 2.5 billion. Also property valuations for Q1 were positive and improved significantly over Q1 2020, and which had a reported evaluation loss. LTV remained largely unchanged, and came to 46.4%, while EPRA NAV increased from EUR 24.32 per share as of year-end to EUR 25.05 per share. I'd like to point out that this number doesn't reflect the gains we have seen from evaluation exercise we did at the end of April.

One side note, even through since year-end, we also reported the new EPRA measures. We continue to state the old EPRA NAV for reasons of comparability, and as everybody is probably still more familiar with EPRA NAV. EPRA NTA, just to give you the picture, to stood at EUR 24.8 as at quarter's end.

Moving to section of the capital markets and transaction, the main highlight is that in Q1, we issued a Green Bond with a volume of EUR 150 million, a term of 7 years and a coupon rate of 1.75%. In addition, we continued our share repurchase program.

Let's now take a closer look to our annual results on page -- on Slide 5. As I already mentioned, total revenues decreased from 56% (sic) [ EUR 50.6 million ] to EUR 43 million, hardly surprising. The majority of the impact comes from our hotel business. Revenues declined from EUR 9.9 million to EUR 1.9 million as Q1 of 2020 was actually still a very good quarter for our hotel business. However, because it also reduced hotel expenses from EUR 8.3 million to EUR 3.2 million. In effect, this means we could compensate a large portion of the shortfall in income on the expense side. Leaving aside, the owner-operated hotels rental income increased from EUR 31.1 million to EUR 32 million. In addition, S IMMO used the crisis to step up building maintenance, which resulted in higher maintenance expenses in the year late comparison. Overall, our gross profit didn't change much from prior year and went from EUR 25.8 million to EUR 23.2 million. As mentioned earlier, if you back out all the hotel business, we even improved over prior year. Overall, EBITDA went from EUR 21.4 million to EUR 18.1 million.

Now flipping over to Slide 6. You can see the property valuation were positive and reached EUR 2.5 million. At this point, I'd like to reiterate that based on a preliminary value analysis at the end of April, we identified valuation increases of about EUR 85 million as of that date. Keeping that in mind, we expect significantly positive valuation for Q2. Our financial result improved significantly over prior year and went from EUR 13.2 million to EUR 5.4 million. The increase is mostly due to noncash effects from derivatives, valuation and FX. On the tax line, you can see a slight offset to the positive development on the valuation. Overall, our consolidated net income went from a loss of EUR 21.4 million to a gain of EUR 9.9 million and thus improved by more than EUR 31 million.

Now skipping over to Slide 7. We plotted FFO I and EPRA NAV since 2017. Both figures exhibited a steadily increasing pricing trend until the year at the start of the pandemic and weren't able to -- and we were able to limit the effects of the corona crisis quite significantly. I'm confident that major negative economic surprises aside, 2021 and beyond, we'll see S IMMO back on the growth track. Especially EPRA NAV will be impacted by the positive property valuation we foresee for the second quarters and hopefully, by the continued recovery of the share price of our investments in CA Immobilien and IMMOFINANZ, but also from year-end to Q1, we always saw a nice increase from EUR 24.32 to EUR 25.05 per share.

Speaking of our investment in IMMOFINANZ and CA Immobilien, I'd like to give you a short brief overview of where we stand at the next slide. As you can see, our investments have recovered from year-end and had a valuation of EUR 516 million as compared to an acquisition cost of EUR 477 million. For a complete picture, one needs to also take the collected dividends into account, which amounts to EUR 42.7 million so far. At current stock prices and even more, so the EPRA NTA, the value of those investments will be much higher still. However, in a stand-alone case, we will have to consider what to do with those investments and through -- and we'll analyze if selling and reinvestment the generated funds with usual leverage is not a better strategy on the mid and long term speaking of valuation, and as mentioned earlier.

Now skip to Slide 9. We have asked the appraiser to perform value analysis of our German and Austrian portfolio, especially in the light of the abolishment of the rent ceiling in Berlin. This analysis was performed as at the end of April and yield evaluation increase of about EUR 85 million. With this as a baseline, hopefully, further positive market developments, we are confident that the Q2 will see a very good valuation result.

Let me now move from the asset side to our debt and the debt financing profile. Slide 10 shows you the maturity profile on the top left-hand side. I believe the bar chart speaks largely for itself. In general, there are no yielding maturities that I will lose sleep over. As for LTV, we more or less kept last year's level and stood and stand at 46.3% at quarter's end. Also, with the secured LTV of 30.4%, there is still quite some potential for financing if the need arises.

Turning to the bottom left-hand side, you can see an overview of our debt structure. As at year-end, close to 60% of our financing are bank loans and the rest are bonds with a maturity profile that will spread out over the years. Further, about 15% of our bank loans are fixed rate and 85% are variable loans. However, it's important to note that we have interest rate derivatives in a nominal value that matches our variable rate loans. As far as cost of funding is concerned, the overall average, excluding derivatives, amounting to 1.68%. Also, we can point to a continuous decrease in cost of funding, including derivatives from 2.67% in 2017 to 2.22% as at the end of Q1, which also constitutes an improvement over year-end. Having covered our balance sheet, let's now take a peek at how S IMMO fairs on the stock market.

Flipping now over to Slide 10. We plotted the share price development of S IMMO against ATX and the IATX. Of course, like everybody else, our stock took quite a hit and devalued by about 22.2%, but still outperforming the ATX by quite a bit. As far as shareholding structure is concerned, our largest shareholders, IMMOFINANZ, 26.4%. Indirectly, Aggregate Holding holds 10.78% and EUROVEA holds 5.21%. More than 57% are in free float.

Before I hand over to my colleague, Mr. Teufelsdorfer, I would like to give you a brief overview of our strategy and business model. In portfolio management, we take the long-term view and apply value-generating strategy in combination with the diversification across use types and geographies. In difficult times, it helps tremendously that we are an established player in the market and that we have great in-house expertise, the strong asset management. We follow in a very sustainable financing strategy, with a well-spread maturity profile and has a land bank with quite some potential. Apart from that, projects are something we do opportunistically. All of that translates into a high-quality portfolio with stable cash flows, a balanced risk-to-reward ratio, dividend payments and an established access to capital markets and a stable credit rating.

Now let's go to Slide 14. S IMMO has been pursuing a sustainable and prudent business policy for more than 3 very successful decades with the aim of constantly creating future income. We apply a business model that is directed towards 3 dimensions of time, anticipating property cycles and benefiting from them. In the short term, we relate at what time it makes economic sense to buy standing properties that generates immediate revenue. Currently, we are only investigating very selectively, but in all of our markets. In the medium term, we search for properties that allow for a quick planning construction progress. This means that the project is ideally completed within 3 to 5 years. At the moment, we don't have a project under construction, but we focus mainly on zoning, planning activities in Bucharest, Budapest and Berlin, for example. To the end, our local experts, continuously monitor the market that S IMMO operates and anticipate trends in the property sector. And in the long run, we are going to work on our land bank in the outskirts of Berlin.

With that, let me now hand over to Herwig Teufelsdorfer. Please.

[Herwig Teufelsdorfer, executive]

Thank you, Bruno. Good afternoon, ladies and gentlemen. I'm happy to join the conference today. I'm CIO of S IMMO AG since mid of April, and I'd like to say a few words to you in regard to sustainability.

So sustainability never was a lip service within S IMMO and never will be. You see that in the figures that we are showing to you on Page 16, which means that more than 1/5 of our portfolio is already certified in DGNB, BREEAM or LEED, and this will still go on, especially with new acquisitions that we are going to make in the near future. You also see that in regard of the already mentioned Green Bonds of EUR 150 million in connection with this, we also had an ESG rating of sustain analytics where we came out with medium risk, which is, I think, quite fine at the moment, but there's still room to improve, which we are already doing. As an example, let me just mention that we are now going to install a 245-kilowatt peak photovoltaic system on 1 of our retail buildings, and this is still to come on. We are working with the system where we are trying to have a continuous improvement on how we comply with ESG criteria.

If we go to Page 17, Green Bonds already mentioned by our CEO, Bruno Ettenauer and coming next to the portfolio. Nothing changed in this regard. So we still have a very diversified portfolio if we look at the pie chart showing the book values by type of use. You see that residential, especially in Germany, is still a big part of our portfolio, but also office with more than 40% plays a very important role to this and land plots with no book value on the 1 side, but big size in terms of area also shown on this part. And on IFRS basis, the property portfolio sums up to almost EUR 2.5 million (sic) [ EUR 2.5 billion ].

Coming to the next chart, having a look at our portfolio, by the regions. You see that regarding, again, the book value, almost 50% of the book value of the portfolio is shown by the German portfolio, Austria will be less than 20%, and 1/3 in CEE countries. I think what is very interesting is potential lettable area out of the land bank projects is more than 165 square meters. This does not include the land bank itself around Berlin. So this is just plots, which can be switched into development very quickly.

Third part of the portfolio overview seen by types of use. Residential, as you see, 39% (sic) [ 93% ] of residential in Germany, with more than 4,000 flats. Austria with 7%. Retail, with a very large part in Romania, Germany by 1/5, Austria by 1/4 of the whole portfolio in terms of the book value. And also interesting the rental yields by type of use, where we see 3.3% at residential sector, which is reflecting the big German share in total.

Let me come to the land bank, chart 22. In summed up with almost 2.5 million of square meters with an average acquisition costs, a bit below EUR 15. More of these, more than 30 projects are currently in progress to become development projects in the next time. And what are we doing with this? We see that computing into, especially Berlin, is becoming more and more interesting for people. And so we always have a look that there is a good connection with S-Bahn, the public transport. And most of these projects will be driven as residential projects. That's from my side for today. Thank you very much, and I would like to hand over to my colleague, Friedrich Wachernig.

[Friedrich Wachernig, executive]

Thanks, Herwig. Warm welcome also from my side. My colleagues have already given you a detailed update on the financials and our portfolio. Let me now guide you through our most recent acquisitions and the current project development. And finally, I will give you a short COVID-related update hopefully, the last one of its kind.

Starting with acquisitions on Slide 23. We have talked about Campus 6 in Bucharest already, but still, let me walk you through the main figures of this acquisition. The Campus 6 consists of 4 building components that is located in Bucharest well-established submarket Center West. We signed a purchase agreement for 2 properties of the business park with a purchase price of EUR 97 million in total in December 2020.

Together, both buildings have a total lettable area of nearly 38,000 square meters and are fully let. Key tenants are Microsoft and Société Générale, and they are already moving in. The deal is expected to be closed in June. Both buildings have already been pre-certified with LEED Gold and WELL Silver. And we are absolutely convinced that the office market in the Romanian capital will continue to grow strongly, following a slight pandemic-related stagnation. The 2 properties will add long-term value to S IMMO's CEE portfolio and will deliver remarkable positive contributions to our earnings.

Let's take a look at our current development pipeline in CEE on the next slide. As you might remember, 2020 ended with the acquisition of a property with roughly 12,000 square meters in the district of Petrzalka, near the sand of Bratislava. We are planning to develop an office project with about 22,000 square meters of lettable space at this site. In Bucharest city center, we are planning to develop a modern boutique office with a total area of around 5,000 square meters for the smaller, very centrally located property on Calea Dorobanti. We will talk more about the project in Bucharest on the next slide, but let me just add up the numbers. These 3 projects with a total investment volume of roughly EUR 130 million will result in roughly EUR 10 million additional annual rental income as soon as they are completed. With all projects, we are currently focusing on planning and zoning activities, so that we can start with the development as soon as economic circumstances will allow.

On the next slide, you can see our project in Budapest. In example, consisting of 3 state-of-the-art office buildings offering roughly 29,000 square meters of usable space will be built on Vaci Ut, one of the most important office locations in the Hungarian capital. The most significant structure is an 11-story building located directly on Vaci Ut.

In line with our sustainability strategy having already mentioned that, we are planning to obtain sustainability certificated by BREEAM and WELL. Despite the current COVID-19 crisis, we see a very stable market trends in Budapest. Overall, I believe that the economic growth will resume following the crisis. I'm very confident that this development project will be a sustainable, high-quality addition to our CEE portfolio. Intense planning activities will be completed this year and construction is scheduled to start next year, 2020. The project is then expected to be completed in 2024.

Moving on the next slide. Let's talk about COVID and its impact on our business. Even though there are still a lot of uncertainties, I think it is safe to say that we can see the light at the end of this tunnel and it is not supposed to be the coming train. It seems that spring is actually bringing a sustained recovery. Based on the progress of the vaccine programs throughout all countries, it can be assumed that the currently opening steps will not have to be withdrawn. The result is a significantly improved economic climate and the expectation of an increasingly strong economic upswing. The vast majority of our employees already have received the first dose of the vaccination, and we are in the starting blocks to return on almost normal life. We are therefore very optimistic for the coming months, even though the figures for the first quarter of 2021 still include COVID-19-related effects.

Let's start with the residential segment. After more than 1 year of pandemia, we do not see any impact on rent levels or vacancy rates. Quite the contrary, we are already seeing positive effects on demand and revaluation results, especially in the very dynamic German market. Beside that, please remember that we always said that the Berlin residential law would be classified as unconstitutional.

Moving on to offices. The last few months have shown us that remote work can be useful, plus working in a physical office, but offices will remain essential, not only for collaboration and representation, especially the extremely important social impact and company's culture cannot be transported from the kitchen or the living room from home. Apart from that, we need to distinguish between various industries and work requirements. I said that before, but I cannot stress this enough only about 33% of jobs can be done from home. Nevertheless, on this, and this is nothing new, efficiency measurements are going to be and has to be evaluated on every location from time to time. Over the last years, also the square meters per workstation have increased throughout our portfolio, and it is safe to say that the concept of modern open space offices might be worth reconsidering in general. We only expect minimal consequences in the office segment, but I'm very convinced that offices will not see a significant impact in demand, especially if they are well-located, efficiently planned, reasonably priced as ours.

Now the retail segment. It's not a secret that there has been a trend towards online retail for some time now that actually started long before COVID-19 was an issue. Obviously, this trend differs a lot between different types of retail and diverse retail properties, but I cannot stress this bad enough, shopping centers and high street offer a shopping experience that cannot be replaced by any online shop. Have you ever tried to buy a new perfume for your partner without testing beforehand? I don't think so. So multichannel retailing will remain and gain extra activity. Therefore, it is our conclusion that classic retail and online retail will continue to complement each other in a way that is beneficial for both, as we have seen this in the past already.

As for the hotels, let me get a little bit more into detail regarding our Marriott Hotels in Vienna and Budapest, for example. Since November, the shutdown and the ban on accommodation for tourists have been enforced in both Marriott Hotels. And the all -- restaurants also have to remain closed. Therefore, there were only international and local business travelers in both hotels from January to May, yet occupancy rates are rising every month. As an early indicator, the increasing demand for business travel is a sign of the economic upswing in industry and production. With its occupancy rate, however, Marriott is far above its competitors. The market share index is regularly 300% to 400%, meaning that the hotel scheme of -- the hotels came off 3 to 4x the proportionate number of overnight stay. Since the restaurant and tourist travel openings on 19th of May in Austria, we have noticed an increasing number of bookings even at very short notice from tourists. Overall, the Whitsun weekend was very positive in Vienna and exceeded expectations by far. Gastronomy is also doing well. The traditional Sunday brunch in Vienna is fully booked until July. The famous candlelight dinner in the [ Champions Power ] is fully booked over the whole week and the high proportion of regulars and the focus on the local community is paying off. Bookings are still very short term. But are visibly becoming longer term, especially seminars and corporate events are being booked again for the autumn and for 2022.

With the opening of entry for the U.S.A., we also expect a significant increase in international travelers in the summer. Overall, we still expect 2021 to be a crisis year for this segment, even though the outlook is currently very good. But the fact of closure for 5 months will, of course, have an impact on the full year result of the segment. For 2022, we are very optimistic for both hotels due to the positive new bookings. So it is safe to say that the first catch-up effects are already becoming noticeable, and we expect a further increase in recoveries in all areas and all asset classes.

With that, I would like to thank you for your attention, and we are looking forward to discussing your questions right now.

[Operator]

[Operator Instructions] The first question comes from Stefan Scharff.

[Stefan Scharff, analyst]

Stefan here from SRC, Frankfurt. I have a couple of questions. The first question is about your quarterly report. In the foreword, you mentioned that you want to increase the activities in the Eastern European region. Perhaps you can say here a little bit more, which countries you prefer or what kind of properties you search for or you're interested to buy? And the second question is about the acquisition in Bratislava, it was in January, and you plan here an office building, 22,000 square meters. Perhaps you can tell here a little bit more about the investment volume and about the timetable? And my third question is about the IMMOFINANZ offer. You already mentioned shortly in your quarterly report that the bidding price is quite low. But perhaps you are preparing more detailed opinion. And when can we expect this to be published?

[Bruno Ettenauer, executive]

Thank you very much. Let me start with question 1 about the acquisition goals and the regional allocation. I think our -- as it was in the past and will continue to do that is that we try to have a balanced portfolio. I mean income-producing and value generating. Value generating is very much, I think, done in Germany, especially with the land bank. And so we need to increase our rental income and increase FFO I income reducing real estate, and there we are going to the east. We bought recently the Campus 6. And we intend to use the -- let's say, the procedures from the earnings from the sale of the S IMMO stakes to invest into the CEE area, mainly, let's say, it will not be clearly defined, yes, but I think we will go to Romania. We'll also maybe look at Hungary to increase rental income and have a stabilized portfolio between East and West.

[Herwig Teufelsdorfer, executive]

Okay. Stefan, the second question regarding Bratislava, I would like to add, we -- I think we will stick to our strategy. If we consider a CEE area, it will be mainly the capital cities where we will -- where we are going to invest our money also in the future as we have there people on the ground, and we know that all these, let's say, the situation, how it is going out there. And they know us as a very reliable partner out there. So we will concentrate and focus still on the capital cities out there.

And regarding Bratislava, the project was an acquisition of a land for developing an office building. So the investment volume is roughly EUR 45 million, and we expect EUR 3.5 million in rental income. We are still in the middle of the building permission process. We already have the zoning. So I think this is another very nice and very, let's say, reasonable project well located, not over -- not high-priced segment as we are very familiar with the Slovakian, or the Bratislava market in the office segment. And you remember, we have placed a very successful project, [indiscernible], just a few years -- 2 years ago. So I think we concentrate on that kind of office development and the next step will be also the Budapest one and perhaps we will find also some more plots in that area, Bratislava, Budapest, Bucharest.

[Bruno Ettenauer, executive]

And in terms of the takeover bid from IMMOFINANZ, I think we stated clearly that we do not support the takeover bid at the current pricing. And I think we outlined all the reasons for. And about your question about [ statement ], I think we have to do that until Wednesday at the latest. And we will -- I think we will be very clear what is our opinion about that.

[Stefan Scharff, analyst]

Okay. And just one add-on question about Croatia. You bought the Zagrebtower in the fourth quarter of last year. So is this deal already fully closed and contributing to your top line? Or you expect it in the -- now in the second quarter to come?

[Bruno Ettenauer, executive]

I mean it is closed, and it is contributing to our top line, and we'll continue to do that also in Q2, hopefully.

[Herwig Teufelsdorfer, executive]

And I can report that the few, let's say, empty spaces were already relet. So it looks pretty good.

[Operator]

The next question comes from Pavel Ryska.

[Pavel Ryska, analyst]

Congratulations on the solid results for the first quarter. I have 3 very brief questions. The first one touches the share buyback program. You mentioned it at the beginning of your presentation. The question is, is it still in place at the moment, given that the share price has increased recently after the takeover bid from IMMOFINANZ? And a second part of this question is, if the share buyback program is somehow dependent on the price. On the current market price or not? The second question concerns the revaluation or the external valuation that you ordered, just some specifics. Was it that you audit valuation for your entire portfolio and it turned out that Germany and Austrian -- German and Austrian assets should be revalued higher? Or was it that you just ordered valuation only for the residential segment in Germany and in Austria and it was revalued higher? And the third question, I was quite interested at the end of your presentation, you said that you only expect minor impact of COVID-19 on offices. I remember last year, it was the previous CEO, who said that there could be some long-term impact such as, let's say, 5% of office space, which will not be demanded anymore by the tenants due to home office trends, et cetera. So is it now that you're kind of upgrading this outlook and you think it will be brighter in this respect? Or is it more or less the same?

[Herwig Teufelsdorfer, executive]

Yes. Thanks. I would like to start with your last question. So if we consider our portfolio and our portfolio consists of office buildings with an average, let's say, square meter tenant of roughly 500 square meters per tenant. So it's -- we do not have this big tenants in our portfolio. The second issue is that our office buildings are located on very good locations. We do not have very high prices in our office buildings. So these are all factors, which we would say we have a very good reasons for our tenants, but they would remain. Definitely -- and I have always said in the past, and we have seen it also during the corona situation that some tenants had to reduce due to their businesses, their services. But in general, what we have seen, and this is also throughout our portfolio, what we can see that most of the tenants are coming back to their offices as many as some of -- or most of the people are going to be vaccinated right now. And the business is coming back. And so we expect that in our portfolio, we do not have this kind of high sky scrapers like in Manhattan or in Canary Wharf in London. So they do not have necessarily to cut down the cost as we have very reasonable price. And very flexible office spaces. Also in our new brand, new buildings like THE MARK or [indiscernible] of what we have seen the same situation.

Definitely, companies in general are looking for efficiency and have to rethink some of their models. But we see that still and again, companies are coming and asking for premises for office spaces, and this gives me the confidence that as soon as the economy is booming, we will see an upward trend in the office segment quite considerably, and especially if you have good located and reasonable price -- projects as we have it in our portfolio. So I'm not -- I'm pretty sure that for big companies who have big services on 1 scale, they definitely are looking of reduce their spaces. But what we also have seen, and this is an outcome of the COVID situation is that many of the people like to be at home, but now they are also very happy to come back to the offices. And not all the employees, who have these kinds of, let's say, convenient situations at home to work from home very, very comfortably. So you have to consider certain points if this is really impacted trend on the long run. What we can see in our portfolio right now, our portfolio, our offices are quite stable, as I'm pretty sure that they are going to remain stable also in the future.

[Bruno Ettenauer, executive]

Now let me go to your question, one about the buyback program. The buyback program is still existing, but we don't buy back because of the current pricing. The second one is the valuation. What we did is we went through our portfolio, [ East Austria ], Germany. We put the potential into 3 boxes, the first one, immediate effect, mid-term effect, long-term effect. And what we've seen, especially in Germany, there were immediate effects because of the lifting of the rent cap. So we did is we asked to, let's say, to underline our experience with external valuations and we did it with CBRE. We did not ask for an acceleration for CEE. The reason is simple. We saw no major changes. Some slight, let's say, increases, but it wasn't relevant to further doing an ad hoc. That was the reason why we think approached the market with Germany and Austria.

[Operator]

And the next question comes from Jakub Caithaml.

[Jakub Caithaml, analyst]

Thank you very much for the presentation. I wanted to use this opportunity to ask about the acquisition intentions, which you -- I mean there were these comments in Bloomberg regarding the possible exit from CA -- from IMMOFINANZ and kind of deploying this money in properties directly. And it seems indeed that this would be the key thing that the management could do to enhance the returns, depending what kind of leverage you use and what kind of field you invested at, it could boost the FFO by about 20% to 50%, which is very substantial. So I wanted to ask first, about whether you see any strategic rationale to hold the IMMOFINANZ stake even once the current bid is over, especially in light of that you haven't really, in my eyes at least, maybe correct me if I'm wrong, but have been actively using the stake and kind of trying to interfere with the direction -- strategic direction of IMMOFINANZ or affected in any way. And also, I was wondering about the deployment and what kind of opportunities are you seeing? And whether you think -- or what kind of time line do you think you would be able to place maybe EUR 1 billion in that kind of properties that you would be after income-generating assets across your regions that you operate in?

[Bruno Ettenauer, executive]

Well, I think it doesn't make sense as the, let's say, large, let's say, merger of the Austrian companies has failed to keep the shareholding, CA Immobilien and IMMOFINANZ any longer. In terms of IMMOFINANZ, we are not obliged [ due to selling ] currently because of the takeover bid. But if the takeover bid is not successful, we will take all efforts to sell the shares and convert into real estate directly.

In terms of a yield expectation leverage, I think as we expect an overall gross yield of 6% and roughly above and the leverage of 50%. Having that in mind, I think we can go up to roughly EUR 1 billion. And can use -- also use the -- our shares at some sort of currency. That's our goal. And as you mentioned, that it will boost our FFO I and also our rental income. And I think it doesn't make sense from an investment perspective to reinvest into IMMOFINANZ after, even if the takeover fails. Of course, because it doesn't be an investment which investors like, frankly speaking, they want to have safety bonds, they want to have it directly and not indirectly via S IMMO.

[Jakub Caithaml, analyst]

And regarding the -- regarding the timing and, in general, the kind of opportunity you are seeing in the markets that you operate because the feature of a number of calls, which I'm having with investors and these other companies seem to be restricted supply of quality real estate, and there seems to be plenty of buyers. I'm just wondering how easy it is to place such a substantial amount of money.

[Bruno Ettenauer, executive]

You're right. It's not that easy, but we have started also to, let's say, to start this process, and we have made meanwhile progress in terms of potential acquisition and our goal is to buy yielding properties so that the effects come into place immediately. And as mentioned, I think yesterday in the press release, I think we started the negotiations but we are not, let's say, in a stadium that we can announce, let's say, some sort of [ term sheet signed ] or something like that, but we are in a good route.

[Operator]

At the moment, we have no further questions. [Operator Instructions]

[Bruno Ettenauer, executive]

Is there are no further questions?

[Operator]

No, there are no further questions.

[Bruno Ettenauer, executive]

If there are no further questions, I would like to thank you for participating in today's call. Our next call will take place by the end of August '21, when we will present the results for the first half year of 2021. Until then, I hope you can enjoy summer and your holidays, maybe even abroad. If you are thinking of coming to Vienna, I highly recommend the Marriott Hotel, a few rooms might still be available. All the best stay safe and healthy and bye-bye from Vienna.

[Friedrich Wachernig, executive]

Goodbye.

[Herwig Teufelsdorfer, executive]

Goodbye.