GERMANY - IVG Immobilien AG earlier this week announced it suffered a €471m loss in 2008 as a result of the severe fall in market values, though officials argue the firm remains robust.
The deteriorating real estate crisis in the fourth quarter led to negative non-cash market value changes of €944.4m compared to €154.1m in 2007 and caused net profit to drop to -€451.m compared to €301m the year before.
Gerhard Niesslein, spokesperson for IVG's Board of Management, said: "The high negative market value changes reflect the real estate markets' sluggish development overall. However, this does not affect IVG's liquidity and cash flow."
Revenues from the operational business increased 14.3% to €608.06m in 2008. IVG's operational EBIT, which excludes unrealised changes in market values and other non-cash adjustments, increased significantly from €325m to €722m, thanks to the partial sale of oil and gas storage facilities that contributed €320m.
Net rental income in IVG's investment division increased from €616.4m to €321m, which when adjusted for acquisitions and sales is an increase of 3.4% from the previous year.
Commenting on IVG's plans going forward, Niesslein said: "Currently, we are working hard to sustainably strengthen IVG and to make adjustments that will enable the company to cope with the challenges in the market. Our efforts are focused on safeguarding the company's financing and on stabilising its operational income.
"Our most promising potential sources of earnings include the successful asset management of our properties and caverns, as well as the funds business," he added.
Assets under management managed for institutional investors increased to €12bn in 2008 compared to €10.3bn the year before. According to a study by German investment firm Feri, IVG Funds ranked top of the league for closed-end property funds.
IVG said it would also selectively sell assets to broaden its scope and is currently negotiating with banks to extend bilateral loans of approximately €900m that were due to expire in 2009.
IVG focuses on investing in office properties in major German and European cities and currently manages assets worth over €22bn overall. It manages €5.4bn of its own properties, 40 specialised funds 10 closed-ended funds worth €3.3bn and mandates for institutional investors worth €12m.
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