Germany's IVG Immobilien said on Tuesday it is to sell 70 caverns to a fund it manages for unnamed institutional investors. In a statement, the German company said that its IVG Caverns Fund will acquire 40 operational caverns as well as 30 additional caverns which are currently under construction and for which IVG has already concluded long-term tenancy agreements.
Germany's IVG Immobilien said on Tuesday it is to sell 70 caverns to a fund it manages for unnamed institutional investors. In a statement, the German company said that its IVG Caverns Fund will acquire 40 operational caverns as well as 30 additional caverns which are currently under construction and for which IVG has already concluded long-term tenancy agreements.
After completion of the new caverns from 2008 to 2014, the fund will pay IVG slightly more than EUR 1.7 bn for the entire portfolio. Of this amount, around EUR 836 mln will be paid in the current fiscal year. IVG said it will use the cash flow to reduce its debt.
IVG's CEO Wolfhard Leichnitz commented: 'Selling the 70 caverns to a fund that we will initiate is a decision of high strategic significance. This transaction confirms our business model and further intensify the good co-operation with our institutional investors. For us, the caverns business is a project development business. Not only has this core competency enabled us to create substantial value in the Caverns Division in the past few years, but we also have considerable earnings potential for the future by developing at least 60 additional caverns.'
IVG said that it hopes to fully place the fund by mid-November this year. The company has received commitments to date for a total of EUR 680 mln and IVG itself will invest an additional EUR 50 mln in the fund. For the remaining EUR 70 mln that needs to be placed, the company said it is in 'advanced' talks with prospective investors.
