Despite the difficult market environment, IVG successfully continued to realign its corporate and financing policies in the first half of 2009 as planned.
The performance of IVG's Asset Management division, for instance, was remarkable: in the first half of 2009, it let a total of approx. 190,000 m² for the Investment division and 139,000 m² for properties managed by us in the Funds division. This meant that the occupancy rate in IVG's own properties remained stable at 91.7% relative to Q1 2009, while the occupancy rate in development projects even increased from 48% in Q1 2009 to more than 57%.
IVG also stayed on course in terms of the realignment of its financing policy: In the first half of 2009 all loan maturities were settled or extended as planned.
IVG's performance is still affected by the aftermath of the international financial market crisis: due to the difficult market situation in the investment market, IVG had to accept markdowns in property sales of approx. 10% relative to the most recent fair value, which led to realized market value changes of -52.4 million in H1 2009. Unrealized non-cash changes in market value improved from -33.7 million in Q1 2009 to 97.9 million in Q2 2009. This was due to two opposite effects: first of all, the write-down of -52.8 million on the investment property portfolio, due to smaller yield expansion and a lower inflation forecast; secondly, the first-time valuation at fair value of 10 caverns currently under construction (+150.7 million). In addition, unrealized negative market value changes in project developments amounting to a total of approx. 91 million continued to have an adverse impact on the financial performance in Q2 2009.
IVG's EBIT amounted to 20.0 million (Q1 2009: 16.9 million). With -62.6 million (Q1 2009: -72.0 million), IVG's financial result showed an improvement, which was mainly supported by the favorable development of interest rates and lower debt than in the previous year. Overall, IVG posted a net loss of -54.5 million (Q1 2009: -44.8 million). The company's adjusted Net Asset Value (NAV adj.) decreased to 10.31 per IVG share (31 March 2009: 12.11).
For the investment portfolio, the GRI yield (Gross Rental Income) was 6.6%, the NRI yield (Net Rental Income) amounted to 5.5%, and the NOI yield (Net Operating Income) amounted to 5.1%.
In the first half of 2009, IVG already delivered on more than half of the sales program of more than 1 billion, initiated to provide supplementary internal financing resources for 2009-2010. The program was achieved in equal measure through direct sales and contributions to funds for institutional investors, in particular the IVG Protect Fund. In addition, IVG Private Funds started placing two new closed-end funds. While EuroSelect 17 invests in KPMG's new headquarters in Amsterdam (Netherlands), EuroSelect 18 provides a portfolio of five attractive properties from IVG's own portfolio in three German cities. Another fund project for private investors is currently being prepared.
Gerhard Niesslein, CEO of IVG, made the following comments with regard to this development: "We are convinced that the ongoing realignment will put IVG into a very good starting position for the next upswing. This realignment is focused on generating stable, recurring income from our investment and funds businesses as well as on reducing our risk exposure by reducing the project development pipeline. Another goal is to improve our cost structure and to simplify the organizational structure of our company. Once markets begin to move up again, IVG will stand out particularly due to the market proximity created by our own branches at the most important European real estate locations."
Source: IVG Immobilien AG