IVG issues first dedicated green fund

IVG, Germany's largest listed real estate company, has issued and fully placed its first specialised real estate fund for sustainable buildings IVG Premium Green Fund. The fund will invest a total of approximately EUR 300 mln in four new or modernizedand sustainable office properties which are being developed by IVG in Berlin, Bonn, Frankfurt and Munich.

The fund’s properties have been completed or will be completed in the period between December 2009 and November 2010. Legal ownership of the properties will pass to the fund after completion and after the tenants have moved in. The IVG Premium Green Fund will be issued in a club deal structure with a total of five investors. Each investor will provide EUR 33 mln of the available equity, amounting to a total of some EUR 165 mln. IVG will also participate in the fund with a share of 20%.

This coinvestment will ensure that all the parties involved will share the same interests over the fund’s entire lifetime. The payout yield will be in the range of 6%, and the target IRR will be in the range of 8%. This calculation is based on a borrowing ratio of 45%, relative to the fair market values.

The office properties are in good city-centre locations and have excellent connections to the transport infrastructure, IVG said in a press release. On 1 April 2010, the preletting rate of the portfolio, which is made up of a total of 10 office buildings, amounted to around 90%. The tenancy agreements on average extend over a period of 10.5 years. IVG expects that the properties will be fully let upon completion.

The purpose of IVG's Premium Green Fúnd is to take advantage of the real estate cycle and the growing demand for 'green' properties to
achieve attractive sales proceeds. The real estate portfolio of IVG's Premium Green Fund covers a lettable area of nearly 81,000 m² (of which approximately 90% is office space) as well as 871 parking spaces.

The key standard for IVG's Premium Green Fund is the green building rating system LEED (Leadership in Energy and Environmental Design), which was developed by the US Green Building Council and which enjoys the greatest international acceptance among investors and tenants. The minimum
requirement that the fund’s properties have to meet is a LEED Silver status. IVG will endeavour to achieve higher certification levels.

IVG Immobilien is one of the leading real estate companies in Europe. The company manages assets worth EUR 22.7 bn and has roughly 650 employees in 18 selected major German and European cities.