IVG has agreed to sell its OfficeFirst portfolio of German offices to Blackstone for €3.3bn (£2.9bn) after an IPO was cancelled over fears that a fair price could not be achieved.
The portfolio’s management team, led by chief executive Michiel Jaski and including Oliver Priggemeyer and Fabian John, will stay on when the deal closes in the first quarter of 2017.
OfficeFirst, which has assets in six German cities including Frankfurt and Munich, will expand Blackstone’s German office portfolio from 4.3m sq ft to more than 19m sq ft.
Falling vacancy rates, muted new supply and accelerating rental growth across Germany have made the country a target for Blackstone. The Blackstone Real Estate Partners Europe IV fund, which is buying OfficeFirst, also bought the 970,000 sq ft Treptowers in Berlin in July.
Blackstone had looked at OfficeFirst before IVG’s intention to float it in September and made another offer when the IPO was pulled. After the purchase, the US private equity giant is expected to continue expanding its German commercial portfolio.
In the weeks following IVG’s intention to float, OfficeFirst refinanced nearly €700m of its debt with a long-term facility and a bridge loan. It had expected to repay the €295m bridge loan to Deutsche Bank and Bank of America Merrill Lynch with proceeds from its IPO.
Blackstone is understood to be in talks for fresh financing after taking on the portfolio’s debt as part of its purchase.
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