GERMANY – IVG Immobilien, Germany’s biggest quoted real estate firm, has announced it will next year launch a German real estate investment trust (G-REIT) with around €2bn in commercial property assets.
The German government legalised G-REITs – listed property firms that are tax-privileged – retrospectively from January 1 but only a handful of German property firms have so far suggested they might launch a vehicle this year.
Bernd Kottmann , chief financial officer at IVG, said his firm would wait until 2008 to launch its G-REIT and take advantage of a reduction in the tax for REIT conversion that will take effect as part of a larger corporate tax reform.
Speaking at a conference in Frankfurt, Kottmann said IVG could raise between €225m and €500m by floating its G-REIT and the free float would be somewhat above 25%.
As the G-REIT law bars one shareholder from holding more than 10% in the vehicle, Kottmann said IVG would employ up to eight separate affiliates as shareholders for its REIT.
IVG’s REIT strategy contrasts with that of UK property companies. Since the UK vehicles were introduced in January, listed firms such as British Land and Land Securities have themselves become REITs instead of launching REIT subsidiaries.
In Germany, Kottmann suggested to the conference, along with his firm’s G-REIT, 10 REIT vehicles would be launched by the end of 2008 and produce a market capitalisation of €10bn.
Kottmann also came out in support of creating a REIT model applicable across the entire EU.
"I know that this idea doesn’t seem realistic right now. But consider that the US REIT market did not become what it is by having REITs for each state," he said.
The US REIT market is the largest in the world, with estimated assets of at least $500bn.
Kottmann added: "Perhaps in a decade from now, we will see an EU REIT which will take the form of an SE (the new legal acronym for a quoted European firm)."
To reach this goal, Kottmann has urged both the European Real Estate Association (EPRA) and German real estate lobby ZIA to jointly lobby the European Commission in Brussels.