After several years of abstinence, KGAL wants to return to the audience market (see ‚k-mi‘ 39/18). At the same time, KGAL continues to fight with its legacy liabilities from the sale of public funds: KGAL is currently ramping up the real estate fund PropertyClass Österreich 6. The fund with 1,100 investors has an investment volume of € 43 million, was launched in 2008 and manages an office property in Vienna with the main tenant PwC. However, the previous accumulated distributions are only 25.5%. Since 2014, the fund is no longer making distributions, as PwC has announced in advance that it intends to move out in 2018 and to withdraw from its lease until the end of 2019.
For some time now, KGAL has been looking for a suitable new tenant for the property, while investors have been on dry land since 2014 (see ‚k-mi‘ 26, 40/17). The fact itself is not a glorious journal for KGAL. Even more embarrassing and extremely bold is the fact that KGAL is celebrating the rental market in the Alpine republic at the same time: „Blitzstart of KGAL Leasing Manager in Austria (…) The asset and investment manager KGAL also launches with its subsidiary KGAL Asset Management Österreich GmbH (…) After a new record in the Austrian rental balance in 2017 (…) Austria’s commercial real estate market shone in 2017 with a historic record mark (…) „, the provider recently trumpeted beginning Into the world in 2018 (see ‚k-mi‘ 05/18). In view of this superlative, one could actually hope that KGAL will drop its private investors a few more bread crumbs from the table of the Insti business. At the same time, the financing luncheon continues to burn relentlessly: the financing for the property, which will run until the end of 2017 at the latest, until June 2018, has already expired, so that the financing bank had to be motivated to hold still.
At the end of September, the provider is now taking its investors by surprise. A follow-up tenant was found and now everything had to go very fast: „We have now managed to find a very attractive tenant for just over half of the space, since this tenant is only willing to rent if he buys the property in a timely manner can, he urges the conclusion of the lease (…) In order not to lose the tenant and thus to ensure the survival of the company, it is necessary to make the necessary decision with a shorter period. “ Within a few days, investors are now to discuss the conclusion of the lease, the complete change in the corporate structure and conversion costs i. H. v. € 4.5 million decide. So ‚end good, all good‘?
Not at all! Because the entire Überrumpelungsaktion is not only under time pressure, but under the slogan ‚eat or die‘, as KGAL must now admit: „Due to the previously unsuccessful letting efforts, the loan of the property company was not extended by the bank after the expiry in June 2018, but only deferred until the end of September 2018. However, the bank has promised to extend the loan if it succeeds by the end of September to conclude a new lease (…) The management of the fund therefore asks the shareholders to approve the planned procedure, Otherwise, the bank will not extend the loan from the property management company and will make it due.As a consequence of a negative resolution, the fund property would then have to be utilized in a short-term distress sale, which would no longer cause significant returns for the shareholders. Thus, the KGAL apparently so the professional asset management of public real estate funds before: In the hottest office market in Europe according to their own screaming press releases looking for years, a new tenant, then a few days before the foreclosure of real estate investors the gun on the chest to put. Much more dilettantischer and irresponsible it goes u. E. not anymore!
But that’s not all: in the few information that KGAL now reveals to the leased line to the investors, it is teeming with bad news: ++ In order to obtain the object, PwC was issued under the cancellation agreement for € 1 million in outstanding rental claims ++ The costs for conversion and revitalization measures of the fund are estimated at € 4.5 million ++ The complicated corporate structure of the fruit benefit agreement is to be dissolved with possible tax disadvantages for investors ++ The now intended subsequent lease to the company Wiener Wohnen covers only 56% of the object surfaces. The rental income is 23% below the PwC-Vormiete ++
Moreover, as „the remaining space is less attractive, it must be expected that rental income will be lower than for the lease with Wiener Wohnen“.
But even with a full letting of the property, writes KGAL to its own investors, „would not be sufficient revenue to represent distributions / withdrawals to you as a shareholder:“ Even with an assumed letting rate of 100% would have in a first step, the existing loan Consequently, from a purely economic point of view, even with a positive course of further letting, no dividends / withdrawals would be expected. “ Anything but pleasing scenarios. Even if the property is sold, the fund is programmed for loss despite full letting. KGAL makes the following calculation: „In addition to the previous withdrawals of 25.50%, from today’s point of view, a final payment of up to 55% of your shareholding can be expected in 2021. The total cash backflow would then be approx paid deposit. “ At most, a hold until 2024, or just over 16 years in total, would be enough, according to KGAL, to repay the investors their deposit plus a small alms.