IVG Immobilien AG (IVG), the German real estate investment company that plans to restructure 4 billion euros ($5.2 billion) of debt, lost more than a quarter of its market value after reporting that earnings worsened.
IVG closed down 27 percent to 41 cents a share, cutting its market value to about 85 million euros. The first-quarter net loss swelled to 45.1 million euros from 4.6 million euros a year earlier, the Bonn-based company said today in a statement.
IVG, once Germany’s largest commercial property company, has lost about 98 percent of its market value since 2008 following property writedowns and difficulties paying debt. The company and its funds own buildings valued at 21 billion euros, including a stake in London’s Gherkin tower, according to its 2012 annual report.
A debt-restructuring proposal will be presented at IVG’s annual shareholders meeting on Aug. 14, according to today’s statement. The company has 3.2 billion euros of debt due by the end of 2014, most of it borrowed to fund operations and acquire property, according to its annual report.
“Even if liabilities are restructured, group cash flow appears insufficient,” JPMorgan Chase & Co. analysts wrote in a research note today. “We see zero value for ordinary equity.”
IVG declined the most ever in Frankfurt trading March 27 after the company said its finances needed restructuring. At the same time it reported a 2012 net loss of 98.7 million euros and said its loan-to-value ratio, a measure of indebtedness, was higher than planned at 70.6 percent.
The company is seeking additional investors in the fund that owns half of the Gherkin after lenders demanded that IVG reduce the debt it used to buy the building.
IVG may offer shares to creditors to cut at least 1 billion euros from its financial commitments, Reuters reported yesterday, citing four unidentified people.
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