IVG IMMOBILIEN AG - Landmark property remains company's portfolio
- Loan volume of around €470 million restructured
- Refinancing terms ensure earnings contribution in double-digit millions
- CEO Ralf Jung: "Commercial viability well above portfolio's average"
In partnership with Bank of America Merrill Lynch, IVG Immobilien AG has concluded full refinancing for its reference property THE SQUAIRE at Frankfurt Airport. The new loan has a total volume of around €470 million and a term of 5 years. Bank of America Merrill Lynch is acting as the sole contractual partner.
The sale process for THE SQUAIRE initiated in parallel with the refinancing negotiations has been terminated. "The offers we received did not match our valuation of this property", explained Ralf Jung, CEO of IVG Immobilien AG. "At the same time, the refinancing obtained makes it commercially attractive for us to keep THE SQUAIRE in our portfolio. It shows a commercial viability well above total portfolio's average". IVG Immobilien AG approached several potential international buyers last September. In December, three of them were given the opportunity to firm up and revise their initial offers. However, the company's management felt that the results were less favourable than the option it has now chosen.
"The refinancing terms ensure that, with its current letting levels, THE SQUAIRE will deliver an earnings contribution in the double-digit millions", explained Fabian John, Head of Corporate Finance at IVG Immobilien AG, who is responsible for structuring and negotiating the loan. Now that the financing agreement for THE SQUAIRE has been successfully concluded, restructuring of the liabilities side of the company's balance sheet is almost complete, said John.
The management successfully negotiated the extensive refinancing of the company's remaining liabilities to banks back in early October. To this end, two new loan agreements with a total volume of around €1.5 billion were concluded with Deutsche Bank. A tranche of around €680 million was then securitised by the bank as part of a CMBS transaction. This was the first issue in Germany to be secured by commercial property and placed on the market since the start of the financial crisis.
In the refinancing negotiations for THE SQUAIRE, IVG Immobilien AG was supported by Clifford Chance as its legal advisor and Rothschild as its financial advisor.
About THE SQUAIRE
THE SQUAIRE at Frankfurt International Airport is an unusual property whose unique architecture has made it a distinguishing feature of Airport City Frankfurt. The joint project between IVG Immobilien AG and Fraport AG, designed by JSK International Architekten, is situated at one of the most accessible locations in Europe - directly above the ICE railway station, with a direct connection to one of Germany's most important motorway hubs and with covered access to Frankfurt Airport's Terminal 1. The site, with usable space of around 146,000 m2, contains offices, two hotels, a business and conference centre and an infrastructure tailored to working life, with restaurants, shops, doctors, fitness facilities, a crèche and services from hairdressing to cleaning. In May 2012, THE SQUAIRE received the LEED Gold Certificate, the American seal for excellent environmental impact, and is therefore one of the most sustainable buildings in the world. In March 2013, THE SQUAIRE received the MIPIM Award in the "Best Office & Business Development" category. Its core tenants are KPMG, Deutsche Lufthansa AG and the Hilton Worldwide Group with its two hotels, the Hilton and the Hilton Garden Inn.
About IVG Immobilien AG
The strategic core business of IVG Immobilien AG is the acquisition, management and sale of office properties in Germany. It is Germany's largest portfolio manager for office property with a portfolio of around EUR 3.5 billion. Its operating business is geared towards the profitable running and needs-driven optimisation of properties and active portfolio management with the aim of adding sustainable value to its own portfolio of property. In addition to this core business, IVG Immobilien AG holds key equity investments in the autonomous enterprises IVG Institutional Funds GmbH, a service provider for structured property products for institutional investors, and IVG Caverns GmbH, a company that builds, operates and rents underground oil and gas storage facilities.
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