IVG: By focussing on core business through the financial market crisis

Bonn, 25.03.2009

  • 2008: Stable operating business
  • Consolidated net loss of €-451.7 million due to negative, non-cash market value changes
  • Net Asset Value (NAV, adjusted) of €12.70 per share significantly reduced
  • €1.3 billion financing extended prematurely
  • Increased efficiency due to new structure

IVG will streamline its corporate structure and respond to changed market conditions by focussing on its solid core business. This will enable the company to minimise risks, save costs, and increase efficiency. As Gerhard Niesslein, spokesman of the Board of Management emphasised today on the occasion of the presentation of the year end results for 2008, this path is crucial for IVG’s success in future. “The focus for us is ensuring financing and stabilising operational revenues. Most important here is to strengthen and to further develop Asset Management for our properties and caverns, because this is where long-term continuous revenues are assured and can be developed”, Niesslein continued.

At the same time, IVG reported that it has done a fundamental step to extend loans in a volume of €1.3 billion prematurely. Finally, the company announced that it would simplify its business model.

Consolidated results 2008
The operational business of IVG in the 2008 fiscal year developed well. Revenues from the operational business, for instance, increased by 14.3 percent from €532.4 million in 2007 to €608.6 million in 2008. IVG’s operating EBIT (excluding unrealised changes in market values and other non-cash adjustments) improved from €325.0 million in 2007 to €722.0 million in 2008. The successful partial sale of the caverns business contributed €320.2 million to this substantial increase. The year end figures are characterized by opposite business developments. Due to high, non-cash changes in market value amounting to a loss of €-944.4 million, IVG reports a consolidated net loss of €-451.7 million (2007: consolidated net profit of €301.0 million). In the same period EBIT declined from €475.6 million to a loss of €-98.6 million. Net Asset Value (NAV, adjusted), calculated according to a new method, reduced to €12.70 per IVG share (2007: €21.66). For the investment portfolio the GRI-Yield (gross rental income) came to 6.7 percent, the NRI-yield (net rental income) to 5.5 percent and the NOI-yield (net operating income) to 5.2 percent. In view of the group’s consolidated net loss, the Board of Management and the Supervisory Board propose to the Annual General Meeting of Shareholders that no dividend be paid out.

Financing ensured prematurely
The credit lines amounting to €1.3 billion which will expire in the next two years have now been prematurely extended on the basis of term sheets. These credit lines were combined in a syndicated loan in cooperation with eleven banks. The loan has a maturity up to the end of 2012. The financial agreement is subject to final documentation.

Business model realigned
Furthermore, the Board of Management and the Supervisory Board of IVG Immobilien AG have approved a strategic realignment of the IVG business model. The aim is to adjust the company to the new economic conditions triggered by the financial market crisis which has adversely impacted the real estate sector as well. To this end, efforts will be made both to ensure the existing earnings potential of operational business and to reduce corporate activities subject to risk.

The basis for the realignment is a lean and more efficient organisational structure. In future. IVG will be divided into two divisions instead of four as in the past. IVG Investment will be in charge of the company’s own investments (real estate and caverns) while IVG Funds will be responsible for planning, marketing and managing investment products for private and institutional investors. The former IVG Development division will be discontinued. Development services for the company’s own portfolio and for the funds division will be provided by the service division of the Asset Management in the future. By concentrating on customer-oriented services, this function will support IVG Investment and IVG Funds. The realignment will be implemented step by step until 2010.

Overview of 2008 results

  2008
in millions of euros		 2007
in millions of euros
Sales 608.6 532.4
EBIT -98.6 475.6
Consolidated net profit after taxes -451.7 301.0
Earnings per share (in euros) -4.18 2.34
Dividend per share (in euros) - 0.70
NAV adjusted per share (in euros) 12.70 21.66

IVG Immobilien AG
IVG Immobilien AG is one of the major real estate companies in Europe. The company is focused on office properties and caverns. Via its network of local branches in selected major German and European cities with approx. 700 employees, IVG currently manages, inter alia, its own properties with a market value of €6.2 billion, as well as specialised funds and mandates for institutional investors with a volume of €12.0 billion and closed-end funds with a volume of €3.3 billion. Overall, IVG manages assets worth more than €22 billion.

Press contact
Dr. Knut Hansen
Tel +49 (0)228 844-193
Fax +49 (0)228 844-338
knut.hansen@ivg.de