IVG to split off core portfolio into separate company
Bonn-based IVG Immobilien AG, the erstwhile heavyweight of the German listed real estate sector, offered proposals to shareholders at last week's AGM as to how to rehabilitate the company's capital market viability. The key element of the plan is to spin off a portfolio of €3bn core assets into a new and separate company.
CEO Dietmar Binkowska told shareholders the group's core office properties in Germany were at the heart of the plan. "Within our overall portfolio, we have identified a core portfolio with a value of around €3 bn with significant upside potential. We intend to move this prime cut of IVG Immobilien into a separate company." The move would replicate the structure IVG uses for its IVG Institutional Funds and its Caverns business, which Binkowska said "would allow the group to improve comparability with other market participants".
The company said it had been laying the groundwork for the plan for some time. In essence, it seems to mean that IVG will prime the core office portfolio as a classic pure play on the German office market. While still at the early stages, said IVG's head of communications Jürgen Herres, "this could lead to a situation where new investors might be welcome – whatever a potential transaction looks like."
IVG emerged from insolvency in 2014 after a turbulent time which saw a major debt restructuring after shareholders in the listed company got wiped out. The restructuring saw creditors of a syndicated loan ending up owning 80% of the company, while holders of a €400m convertible bond gained control of the other 20%
Previous CEO Ralf Jung left IVG earlier this year due to irreconcilable “differences of opinion” over IVG’s future strategic direction.
IVG Immobilien still owns prominent assets such as the Gherkin tower in London and The Squaire at Frankfurt Airport, the European headquarters of consultancy group KPMG, and a major project development at the time for IVG whose cost overruns ultimately helped contribute to the company’s downfall.