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BONN-Germany’s largest listed real estate group, Bonn-based IVG, has fully placed a new open-ended, specialized real estate fund with five institutional investors, targeting investment volume of €300 million. IVG Protect Fund targets a yield of 6% per annum, and a borrowing ratio of 47%. In agreement with investors, the fund may be liquidated at any time.

IVG transferred to the fund eight high-yield office properties located in Brussels, London, Paris, Berlin, Hamburg and Munich. It said that the fund placement attracted so much demand that several interested parties could not be served.

“We are currently at the very bottom of the business cycle, and we will now increasingly take advantage of this opportunity,” IVG CEO Gerhard Niesslein told an investors’ meeting recently. Against the background of greater volatility and higher risks of inflation, investments in real assets would become an essential part of capital allocation.

IVG is pursuing a new approach with its Protect Fund. The concept developed by its IVG Institutional Funds arm is based on aligning interests between fund investors and IVG as the asset seller. IVG will retain a 20% stake in the fund’s equity and use this as a risk cushion.

The institutional investors will be protected against any write-downs for five years since any falls will first be offset against IVG’s share, while the fund will fully benefit from any value growth. IVG will participate only by a performance fee. Protect Fund is a special fund under the German Investment Act and therefore has an efficient structure from a tax and regulatory perspective. Via its branches in major European cities, IVG has been familiar with some properties of the Protect Fund for years and will retain asset management.

IVG manages assets worth €22.7 billion at 19 locations around Germany and Europe, and holds properties directly in its own portfolio with a market value of €5.1 billion. In addition, the company builds and operates underground caverns for storage of oil and gas in northern Germany. In the funds segment, IVG is the market leader in specialised real estate funds for institutional investors. Including the closed-end real estate funds for private investors, IVG manages funds and mandates worth a total of €15.6 billion.

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