IVG, the Bonn-based real estate company, has pulled the planned initial public offering of its German office portfolio after a “significant deterioration in the market environment in the real estate sector in the last days.”
The firm announced it would postpone the listing of Officefirst Immobilien, a company launched in July containing 97 properties and valued at €3.3 billion of office space, on the Frankfurt Stock Exchange until further notice. The floatation was planned for Friday.
IVG had planned to sell as much as €450 million worth of shares in Officefirst via a primary offering. The firm was undertaking due diligence on investor appetite and pricing levels before deciding market conditions had worsened and, consequently, against a public offering.
Michiel Jaski, Officefirst’s chief executive officer, said: “The consistently positive response to the company’s business model and portfolio in more than 100 discussions held with investors has once again confirmed our belief in the intrinsic value of the Officefirst properties. Nonetheless, 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.”
Officefirst counted concerns about future European Central Bank monetary policy and the prospect of a base rate increase by the US Federal Reserve as reasons behind prospective investors’ reticence to take up the share offering. The firm also pointed to a 6.4 percent decrease in the FTSE-EPRA/NAREIT EUROPE index, an index of listed property companies in Europe, since Friday, 30 September, as a factor.
The pulling of a listing will alert private real estate investment managers which had been circling the portfolio prior to IVG’s declaration that it would seek a floatation. Indeed, Blackstone, the New York-based private equity real estate giant, is understood to have bid approximately €3 billion for the portfolio using capital from its opportunistic fund series. At press time, no fresh approach to buy Officefirst was understood to be considered.
Officefirst contains 97 properties across the German cities including Munich, Frankfurt, Berlin, Dusseldorf, Stuttgart, and Hamburg. They include 11 development sites or land parcels, reflecting a lettable area of 15.2 million square feet. The assets generate an annual rent of €207 million.