GERMANY – German real estate investment firm IVG Immobilien is expecting to convert its office assets into a real estate investment trust (Reit) but not before Spring 2008, according to the firm’s first half financial results.
Details of the property investment house’s six months results to the end of Jun 2007 reveal the company is still planning to launch a G-Reit subsidiary worth approximately €3.5bn in 2008 which will feature its "future focused office vehicle in Germany" and is expected to help finance new property purchases.
IPE Real Estate reported earlier this year IVG had received approval from its board to convert some of its assets into a Reit subsidiary.
At this stage, the exact date of the G-Reit’s launch is still subject to market conditions. But Dr. Wolfhard Leichnitz, said having obtained its pre-Reit status this month, the vehicle will sit within its investment division and the firm expects to retain a majority stake in the Reit once launched, so IVG can play a significant part in the consolidation phase of the Reit market.
Elsewhere within the firm’s results, IVG reported net earnings after tax rose by over 61%, from €116.8m to €188.5m, because of strong activity across all four of its divisions.
The German real estate magnate is now about to open the sale of its EuroSelect 14 funds to the wider investment market, a fund which contains one of London’s landmark properties, known as "The Gherkin", bought from Swiss Re last year for £630m (€930m).
Over the last six months, IVG acquired properties across Germany worth more than €1.2bn, increasing the investment division’s holding of German real estate by 58%, while the value of its investment portfolio rose 30% from €144.8m to €207.6m.
IVG expects its financial position to remain buoyant because of its continued focus on the German office market, which is said to be benefiting from the country’s economic growth, while the closing of its Budapest Infopark D development project in the autumn should bring "a handsome profit", alongside earnings generated through the rental of four additional converted gas storage caverns in it Caverns division.