IVG Immobilien, one of Germany’s biggest property companies, is planning to list a €3.3 billion office portfolio after deciding against selling it to New York private equity real estate giant Blackstone.
According to a report by news service Bloomberg, IVG will seek to sell as much as €450 million worth of shares in OfficeFirst at the initial offering, with a view to using the proceeds to both meet debt obligations and to convert the company into a REIT. If successful, the company would trade on the Frankfurt stock exchange.
Blackstone is understood to have offered approximately €3 billion for the company, which controls 97 assets in six German cities, including Frankfurt, Munich, Hamburg, Stuttgart, Dussedorf and Berlin. Included in the portfolio is The Squaire, a large mixed-use complex near Frankfurt airport.
The assets are 91.6 percent occupied and have a weighted average unexpired lease term of 5.5 years, although is understood they face some near-term re-leasing challenges. As such, Blackstone was understood to be bidding for the assets on behalf of its opportunity funds series.
The Blackstone bid featured prominently at PERE’s Germany roundtable discussion, which is out in the forthcoming October issue of PERE. One of the roundtable participants, who asked for his comments to be noted on an unattributed basis, said the portfolio would be most attractive to opportunistic capital because of what he described as a “fragmented” leases for a new landlord to operate. “You will have to give a lot of incentives to re-lease the portfolio,” he added.
IVG, which is today owned by around 30 hedge funds after the company slipped into insolvency in 2013, spun off the office portfolio into OfficeFirst in July with a view to attracting potential investment. While Blackstone’s bid gave rise to the possibility of a private sale, it has long been known that IVG was evaluating a public offering too.
Neither IVG, nor Blackstone were immediately available for comment.