IVG
Michiel Jaski - IVG
According to new CEO Michiel Jaski, IVG plans to position itself as a "leading player for office properties in Germany". The company is already in talks with a number of banks to refinance its debt over the coming weeks to take advantage of the ongoing low interest rate environment.
Germany's erstwhile largest listed property IVG Immobilien AG has embarked on the sale of its core property portfolio under the flag of its new corporate identity as Officefirst Immobilien. The portfolio comprises 97 office properties, valued at €3.25bn and yielding 6.5%.
Officefirst Immobilien is a new legal entity, created by the beleaguered IVG to prime its core assets for sale to capital market investors later this year. Deutsche Bank and Goldman Sachs are advising the Bonn-based company on optimising itself for the sale. IVG took the decision to spin off the division last year after emerging from its 2013 insolvency, brought on by the crushing weight of its debt.
IVG plans to sell its overseas office properties separately, as well as its funds division, recently renamed Triuva, which includes the company's oil and gas caverns business in northwestern Germany.
In a statement to the media, IVG said, "This is a very first step in a process aimed at preparing Officefirst for capital markets viability. The next step will be to refinance the portfolio, something which we aim to complete by the third quarter. Once that is fixed the company is ready for any capital markets transaction, which may take the form of an Initial Public Offering, a M&A deal, a straight sale or any other form of deal, depending on the situation arising or on a special opportunity."
According to new CEO Michiel Jaski, IVG plans to position itself as a "leading player for office properties in Germany". The company is already in talks with a number of banks to refinance its debt over the coming weeks to take advantage of the ongoing low interest rate environment.
Local observers in Frankfurt suggest that there has been considerable interest from up to ten potential buyers for the portfolio, including several foreign players. Interested parties are due to submit expressions of interest by the end of July, with first bids due in September.
Among German players, Alstria Office REIT and Patrizia Immobilien will almost certainly be looking at the portfolio, as both are keen to expand via portfolio as well as company acquisition. Insurer Allianz, already a major tenant of IVG and a former owner of many of the assets is thought to be another very outside candidate.
However, the option of exiting even partially via a stock market listing is still thought to be preferable to IVG's management.
The company is now owned by about 30 hedgefunds, previous bondholders who became debt-for-equity owners after the company went bankrupt, wiping out previous shareholders. Leading hedge funds such as Davidson Kempner, York Capital, Marathon Capital Partner and Anchorage Capital are now looking for a profitable exit in a fairly benevolent market.
About 96% of IVG's office assets are located in Frankfurt, Munich, Hamburg, Stuttgart, Düsseldorf and Berlin, with the twelve most valuable properties making up 58% of the value. The assets are 93% let, generating rent of more than €205m a year, with a remaining WALT of about 5.5 years. Many of the assets are likely to have risen substantially in value over the past five years, although many are in B-locations and not absolutely 'prime' by some investors' definitions.
Foremost among IVG's office properties is the "Squaire" at Frankfurt Airport, still Germany's largest office building with 146,000 sqm, but in no small measure the building whose enormous construction problems and cost overruns helped to drive IVG into insolvency. It cost more than €1bn to build and is currently valued at €700m in the IVG books. Now with over 90% occupancy, its principal tenant is consultancy group KPMG, which houses its European headquarters in the building.
