Hedge Fund investors hoping for an IPO that would enable them to cash out their stakes in IVG Immobilien, one of Germany’s top property companies were not only stymied when one of the EU’s biggest IPOs of the year was pulled by IVG and it’s underwriting banks, those investors have since become more frustrated after IVG then rejected Blackstone Group’s offer to acquire the company in a private transaction.

(WSJ) Oct 25–The biggest initial public offering in Europe’s real-estate sector this year was postponed when investors became skittish over market volatility.

But it was the decision to turn down a private sale to Blackstone Group LP in the days following the pulled IPO that has ignited animosity among the roughly 30 hedge funds that own IVG Immobilien AG, one of Germany’s biggest property companies, people familiar with the matter said. A spokesman for IVG declined to comment.

The turmoil poses a problem for IVG’s chief executive, Dietmar P. Binkowska, who believes the contentious relationship between hedge-fund owners is limiting his ability to use fresh funds for other parts of the business, they said. Mr. Binkowska declined to comment through the IVG spokesman.

The situation highlights the hurdles companies face when owned by a collective of hedge funds, an industry that recently has come under pressure because of poor performance and large outflows of money. Such fractured ownership structures are rare for major European property companies, with IVG’s problems rooted in the financial crisis.

IVG had planned to float a stake in a subsidiary, OfficeFirst Immobilien AG (ISIN: DE000A2ASHC7), on the Frankfurt Stock Exchange in a deal that valued the company at up to €1.8 billion ($1.96 billion). That number included issuing new shares worth €450 million for OfficeFirst, which has a portfolio of about 100 properties in six of the biggest German cities.

Given the size, the outcome of the deal was being closely watched. There have been just $1.1 billion of real-estate IPOs in Europe so far this year, well below total volumes for the previous three years, according to data-firm Dealogic. A successful IPO of OfficeFirst would have been a strong signal for Europe’s listed real-estate market, analysts said.

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Postponing the IPO was only the latest headache for IVG, once Germany’s largest commercial real-estate company. In 2014 the firm was taken over by creditors as mounting debt in the aftermath of the financial crisis pushed it toward insolvency.

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Hedge Funds Square Off Against German RE Firm IVG Immobilien After IPO is Pulled