IVG Said to Tap Banks to Sell $3.4 Billion Property BusinessBy
Deutsche Bank, Goldman Sachs said mandated by German company
IVG cancelled attempt to sell Frankfurt's Squaire in January
IVG Immobilien AG, the German property company that was taken over by creditors including Cerberus Capital Management LP in 2014, is preparing to exit its main business of owning and managing offices, according to two people with knowledge of the plan.
IVG has hired Goldman Sachs Group Inc. and Deutsche Bank AG to advise it on the process, said the people, who asked not to be identified because the information is private. IVG is seeking to sell the European office buildings on its balance sheet, which are valued at about 3 billion euros ($3.4 billion), in a private sale by the end of this year or as part of a separate company in 2016, the people said.
Representatives at IVG, Deutsche Bank and Goldman Sachs declined to comment.
IVG, once Germany’s biggest real estate company, was acquired by its creditors last year following a 3.2 billion-euro debt restructuring. Former lenders, which include Cerberus and Morgan Stanley, have since passed on their stakes to other investors, said another person with knowledge of Bonn-based IVG. Morgan Stanley declined to comment and no one at Cerberus was available to comment.
If IVG fails to sell the properties as a portfolio this year, the company will split them off into a separate unit with a new name, the people said. The company would then sell the unit to an investor or on the stock exchange in an initial public offering. IVG’s caverns business and its institutional fund management unit -- recently renamed Triuva -- would remain separate.
In January, IVG canceled a plan to sell The Squaire, which it built in 2011 for more than 1 billion euros, after offers came in below expectations. Instead, IVG obtained a loan from Bank of America Corp. to refinance debt on the building. In addition to The Squaire, IVG owns 190 properties in Europe, 152 of which are in Germany.
European real estate owners are taking advantage of high prices and strong demand from pension funds and sovereign wealth funds to sell large groups of buildings. Properties valued at about 59.3 billion euros changed hands in the third quarter, 24 percent more than a year earlier, according to data compiled by broker JLL. Germany had the fastest growth among western Europe’s biggest markets in the first nine months with an increase of 46 percent, JLL said.
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