IVG extends EUR 500m debt on The Squaire

German property company IVG Immobilien has clinched the restructuring of roughly EUR 500 mln of debt securitised against the The Squaire office project at Frankfurt International Airport.

Bonn-based IVG said it has extended the credit facility through to end-2013 and secured a new EUR 35 mln loan for The Squaire parking. The new maturity date is in line with IVG's exit strategy for The Squaire, which is planned to be put on the market in 2013. The loan-to-value ratio remains unchanged at 62%.

The announcement is expected to prop up IVG's securities which on September 13 hit a historic low of EUR 2.11 per share. The stock - which was trading roughly at par with net asset value of EUR 6 back in May - has shed almost 60% of its value over the past four months.

The downward trend started in June and accelerated significantly in August on the back of disappointing second-quarter results and higher-than-expected costs reported on the company's flagship project. IVG unveiled EUR 74 mln in budget overruns on The Squaire due to 'a wave of invoices coming in from subcontractors' on completion of the major section of the project.

The EUR 800 mln development project provides 140,000 m² of office and hotel accommodation on top of the ICE high-speed train station at the airport. It is 82% occupied with main tenants including Lufthansa, which signed up in August, KPMG, Bilfinger Berger, and IVG itself. The Squaire - which is 97% owned by IVG and 3% held by Fraport - will generate EUR 20 mln in rental income next year that will grow up to EUR 40 to EUR 45 mln in 2013 after expiry of the rent-free period.