IVG’s OfficeFirst Unit Delays IPO Citing Investor Reluctance

  • Uncertainty about ECB’s monetary policy damp investor appetite
  • Share sale planned for Oct. 14 now on hold indefinitely

IVG Immobilien AG postponed an initial public offering for its German office unit a month after saying the sale would proceed, citing a deteriorating investment market.

The IPO of OfficeFirst, planned for Oct. 14, has been put on hold indefinitely, according to a statement on Monday from the unit. The business, entirely held by IVG, owns real estate valued at 3.3 billion euros ($3.7 billion).

“We have to recognize that the market environment has become so much bleaker in the last few days that a fair price would currently be hard to attain,” OfficeFirst Chief Executive Officer Michiel Jaski said in the statement.

IVG, once Germany’s biggest landlord, was taken over by creditors in 2014 in a 3.2 billion-euro debt restructuring. The company created OfficeFirst this year to hold most of its office properties, almost all of which are in six German cities including Frankfurt, Berlin and Munich.

The IPO was to consist of new shares amounting to 450 million euros as well as stock owned by IVG. OfficeFirst said uncertainty about European Central Bank monetary policy and concerns about a Federal Reserve rate increase have led to “marked reticence among investors met in the course of the IPO roadshow.”

OfficeFirst plans to become a REIT in 2017. The landlord intends to pay a dividend for this year equivalent to about 50 percent of its funds from operations. From 2017, the payout will amount to 65 percent to 70 percent of FFO.

Blackstone Group LP had offered to buy the company for about 3 billion euros, a person with knowledge of the matter said last month.

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