REAL ESTATE – German real estate firm IVG says it has issued €400m worth of convertible bonds for the purpose of financing future growth and large acquisitions.
IVG sold the convertibles last week to primarily European institutional investors via a private placement. The bonds have a 10-year maturity and carry a coupon of between 1.5% and 2%.
As convertibles, the bonds also give investors the right to subscribe to 11.6m shares in IVG, which, with a market capitalisation of €4.1bn, is Germany’s largest listed real estate firm.
The bond sale coincided with a newspaper interview by IVG chief executive Wolfhard Leichnitz in which he said the firm would acquire €1bn worth of new properties in 2007.
Prior to joining IVG in July 2006, Leichnitz was the CEO of Viterra, a German firm that owns and operates €7bn worth of real estate. At IVG, Leichnitz succeeded Eckart John von Freyend, who has since become a lobbyist for the German real estate industry.
Leichnitz’s biggest move so far was the near complete takeover of Oppenheim Immobilien-Kapitalanlagegesellschaft (OIK), a provider of property funds for institutional investors.
While OIK was begun as a joint venture between IVG and German private bank Sal. Oppenheim, IVG acquired nearly all of Oppenheim’s stake last January to lift its shareholding in OIK to 94%.
OIK is Germany’s leading provider of real estate funds for institutional investors, with around €6bn invested in the products. As a whole, IVG manages €18bn worth of real estate assets.
Meanwhile, UK private equity firm Terra Firma has reportedly postponed the stock market floatation of its €10bn German portfolio – of which Viterra is the main part.
Citing sources familiar with Terra Firma’s plans, the Financial Times Deutschland said the private equity firm would not likely float the portfolio before the second half of 2007. The FTD said that unlike Fortress, a peer of Terra Firma’s based in the US, the UK firm was facing delays in domiciling the portfolio in the tax-efficient Duchy of Luxembourg.
But a spokesman for Terra Firma played down the news report, stressing that an IPO was just one of "many options" available to the private equity firm in dealing with its German portfolio. The portfolio comprises 230,000 flats across Germany.
"We have never commented on speculation regarding when we might do a floatation," the spokesman said.
Last October, Fortress floated 25% of its German property portfolio, consolidated under the firm Gagfah, on Frankfurt’s stock exchange. Fortress raised €850m with the IPO.