German firm IVG announced on Friday that its EUR 300 mln IVG Protect Fund has been fully placed. Protect is an open-ended, specialised real estate fund for institutional investors.
German firm IVG announced on Friday that its EUR 300 mln IVG Protect Fund has been fully placed. Protect is an open-ended, specialised real estate fund for institutional investors.
IVG transferred eight office properties located in Brussels, London, Paris, Berlin, Hamburg and Munich to the fund.
Dr Gerhard Niesslein, spokesman of IVG's board of management, said at an investors' meeting in Frankfurt: 'We are currently at the very bottom of the business cycle; and we will now increasingly take advantage of this opportunity.'
IVG said it has taken a new approach with its Protect Fund. The concept developed by IVG Institutional Funds is based on an alignment of interests between the investors and IVG as the seller. IVG will retain a share of 20% in the fund's equity and use this share as a risk cushion.
The investors (five institutional investors) will be protected against any writedowns for a period of five years due to this value protection mechanism. Any decrease in value will first be offset against IVG's share, while the fund will fully benefit from any increase in value; in this case, IVG will participate only by a performance fee.
The fund has a target yield of 6% and a borrowing ratio of 47%.
