Interview: James Bauer, Managing Director, REAG - Five reasons to ...

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ing the deal, “The merger of GEHAG into
Deutsche Wohnen gives rise to a platform
that will help shape the consolidation of the
German housing market, and from which
we will profit in the long term.”
Since then, GEHAG’s people seem to
be sweeping into control at the newlymerged
company. Just this week, Andreas
Lehner, CEO of Deutsche Wohnen
since 2004, resigned to be replaced by
Michael Zahn, previously the sole CEO
at GEHAG. Other personnel changes are
also in full swing.
GEHAG also announced a new partnership
with Berlin-based Gegenbauer Property
Services GmbH to handle the asset
and facility management of the group’s
expanded property holdings throughout
Germany, a task previously handled by
thirty-one of GEHAG’s own people. The
GEHAG team will now be integrated into
Gegenbauer’s operations from January
2008.
The decision to go with Gegenbauer
was made after several months’ negotiating
with potential asset and facility management
partners. GEHAG’s CEO Michael
Zahn said the choice of partner was “above
all, for our tenants, a major win in terms
of sustainable quality and service…In addition,
by working with external partners
we can lower our costs by an average of
20%.”
Germany/Financing
IVG Immobilien opens �€1.35
billion new line of credit
The Bonn-based IVG Immobilien,
Germany’s second-largest listed property
company, has established a new 7-year
line of term loans and revolving credit with
17 banks, which it said would improve its
liquidity by more than �€1 billion.
The new line of credit replaces existing
arrangements of �750m put in place in
July 2005 as well as other bilateral lines of
credit. Interest payable on the new credit
lines, which were issued by a consortium
of IVG’s own house banks, is tied in with
the company’s overall level of debt. IVG
said that with lenders oversubscribing to
lend it money, it was able to increase its
credit line to �€1.35 bn from the originally
planned �€1.2bn. The company said that
the term loan was attracting an initial interest
rate margin of 0.60% above Euribor,
while the revolving loans were charging a
margin of 0.50% above LIBOR.
IVG recently confirmed financing of
��€1bn
from Hypo Real Estate for its acquisition
of an office building portfolio from
insurance group Allianz (see REFIRE issue
August 31st), a ‘core portfolio’ for one of
its special purpose vehicles, consisting of
a long-term loan and an equity purchase
bridging loan.
Separately, IVG said it had sold its tank
storage division, part of its �€1.4 billion underground
caverns business, to TanQuid
Zweite GmbH, a private equity group
belonging to the Australian investor Macquarie
Group. IVG got �€58 million for
the sale of the division, which has a storage
capacity of over 1.1m cubic metres.
TanQuid Zweite is one of the largest independent
tank storage service providers in
Germany. IVG plans to expand its large
volume underground caverns operations,
in which it stores oil and gas, by a further
90 caverns.
Germany/Disposals
DaimlerChrysler and Sony
selling prestige Berlin properties
Industrial firms DaimlerChrysler and
Sony were reported this week to putting
their trophy properties on Berlin’s Potsdamer
Platz up for sale. The Daimler
complex is said to be worth about �€1.5
billion, and Sony’s next door building is
estimated at about �€700m, according to a
report in the business daily FTD.
The properties are likely to attract major
investor interest given their key prestigious
locations, although in light of the difficulty
10
that some investors are experiencing in leveraging
large sums, the sales prices are
likely to be lower than what they could have
achieved several months ago. The Daimler
complex, built in the mid-1990’s and
completed in 1998, consists of 17 different
buildings including offices, the Grand
Hyatt Hotel, shopping centres, theatre
and cinemas. There may be some legal
restrictions on the sale of the property with
the report suggesting that the State of
Berlin had stipulated no early sale within
ten years of the building’s completion.
Daimler has mandated Merrill Lynch
and property services group Angermann
with finding a suitable buyer, while Sony
have asked the Frankfurt investment bank
Drueker to handle the marketing of its
property.
Germany/Pfandbriefe
German banks seek talks to
make Pfandbrief more competitive
Gerrmany’s Pfandbrief-issuing banks are
seeking talks with Berlin’s Ministry of Finance
to make amendments to the law
governing the issuing of Pfandbriefe, one
of Germany’s most successful financial innovations.
Louis Hagen, head of the Verband
deutscher Pfandbriefbanken (VDP),
which represents the 32 member institutes
licensed to issue Pfandbriefe, said last
week that the Pfandbrief in its current form
could be improved, and the VDP would
welcome some fine-tuning to the Pfandbrief
law within the current legislative period.
The instrument, in contrast to covered
bonds in the US and elsewhere, is protected
by law in the event of insolvency and
is subject to its own regulatory authority,
which examines each Pfandbrief in detail
for its constituent make-up in a rigorous
process every two years.
Despite the extremely sound track record
of the German Pfandbrief, the instru-