GERMANY - While real estate asset manager IVG and some of its competitors reported record earnings for 2007, the companies there will fear the financial crisis will have a major impact on this year's results.

IVG increased its group income in 2007 by 162%, compared with 2006, to reach €301m, the company's net asset value grew 23% to €29.03 per share.
Assets under management also rose from €18bn to €20bn while assets managed for institutional investors grewfrom €10.1bn to 10.3bn.

IVG noted the performance was pushed by changes in value, higher income from rents because of portfolio growth as well as sale of unused property.

However, the company has warned it expects "significant, direct and indirect consequences for the real estate sector" in 2008 as a result of the financial crisis, sparked by US subprime sector and the subsequent credit crunch in August last year.

Profits through increased rents via further purchases for the portfolio are expected to be offset by a lack of income from realised and unrealised changes in value, because of the market situation.

That said, income for the IVG funds and IVG development businesses is expected to reach the 2007 level.

"The financial markets are in a deep crisis which is affecting our business considerably," noted board member Wolfhard Leichnitz.

"At this point in time, it is impossible to make a reliable estimate on the developments for 2008. As we do not expect our investment portfolio to increase in value, this year's result will be well below last year's."

Similar to other companies, IVG has finished preparations for launching a German-REIT but put the actual IPO on hold waiting for better conditions on the capital markets. (See earlier IPE Real story: CA Immo postpones G-Reit)

TAG Immobilien is one of the other German real estate managers which is waiting for fairer weather on the financial markets before launching its REIT.

In its preliminary results, TAG noted its subsidiary with pre-REIT status "TAG Gewerbeimmobilien" now had doubled its assets under management to €400m.

In 2007, the whole TAG group increased its earnings five-fold to €31.1m.

However, chairman of the board Andreas Ibel noted "the discrepancy between the business success and the valuation of the company's shares on the stock market were significant".