Back to the drawing board for IVG's OfficeFirst after pulled IPO
Germany's erstwhile largest listed company IVG Immobilien AG 'indefinitely' shelved its plans to list its OfficeFirst subsidiary, citing deteriorating market conditions.
The German manager was looking to float €888m of shares in its commercial office division OfficeFirst. The division holds a €3.2bn portfolio, consisting of 97 separate properties, mainly located in Frankfurt, Munich, Berlin, Hamburg and Stuttgart.
The listing on the Frankfurt Stock Exchange was due to have taken place on October 14th, a month after the company appeared to have broken off negotiations with US private equity group Blackstone to buy the unit.
In a statement following the IPO cancellation, OfficeFirst's recently appointed CEO Michiel Jaski said “We have to recognize that the market environment has become so much bleaker in the last few days that a fair price would currently be hard to attain.”
The IPO was to to involve issuing new shares amounting to €450 million euros as well as selling stock owned by IVG. OfficeFirst said uncertainty about European Central Bank monetary policy and concerns about a Federal Reserve rate increase had led to “marked reticence among investors we met in the course of the IPO roadshow.”
In a move designed to make the office division saleable either via a trade sale or a market listing, IVG spun out its office properties into the new company in June, when CEO Jaski described the move as "a way to fully exploit the entrepreneurial potential that is a solid basis for our company."
The portfolio, one of the largest in Germany, has an occupancy rate of 91.4%, and generates rent of €207m annually. The average WALT from tenants, who include many of Germany's blue-chip corporate names, is 5.3 years. Net rental income for the first six months of this year was €99.5m (up from €97.7m last year), recurring EBITDA was €76.6m {up from €72m), FFO rose to €46.6m (€40.9m) and consolidated net profit rose to €122m (from €87.8m).
Last month the company refinanced €695m of loans via a consortium of banks, which included a bridge loan which the company had planned to repay with the proceeds of the IPO. Finance director Fabian John said at the time the IPO would help to lower the company's cost of capital and help to reach the target of 45% LTV.
IVG said further in its statement that it would "continue to evaluate the market environment regarding a potential IPO in the future."
IVG Immobilien is owned by 30 hedge fund ex-bondholders who took over the company in a debt-for-equity swap three years ago that wiped out the original shareholders in what had been Germany's largest listed property company in its heyday.