Aareal Bank has sold another portfolio of sub- and nonperforming loans (SPLs/NPLs) to Merrill Lynch's Global Principal Investments ("ML GPI"). The parties have agreed not to disclose the terms of the sale. With this transaction, Aareal Bank has reduced its NPL portfolio to below €500 million. The transaction will not burden Aareal Bank's net income.
Under the transaction, the investor acquires loans collateralized by approx. 250 residential and commercial properties. Since June 2005, five non-performing loan portfolios with an aggregate volume of approximately €2.4 billion have now been sold.
"With the sale of this additional portfolio, we are reducing our volume of defaulted loans to below €500 million," said Dr. Wolf Schumacher, Chairman of the Management Board of Aareal Bank. "We completed our strategic restructuring programme ahead of schedule in 2006 after just one and a half years, rather than the planned two to three years. This transaction has strengthened our ability to implement an ambitious growth strategy. The relief on capital from the sales will be invested to generate further highly profitable new business," he continued.
"We will explain our new growth program in detail at the annual press conference next Monday, 26 March 2007." Through ML GPI, Merrill Lynch is one of the most active real estate and distressed debt investors in Germany and this transaction follows a real estate transaction between Aareal Bank and ML GPI just two weeks ago. "With this acquisition, Merrill Lynch is further strengthening its market presence as an active investor in Germany. We look forward to continuing to grow our German asset base," says Stefan Aumann, German head of ML GPI.
The transaction was structured as a 'true sale', whereby the bank sold loan receivables (where the corresponding loan agreements had already been terminated) to the investor, together with the associated collateral. With this type of disposal, no residual risk remains with the bank. This fifth portfolio sale is scheduled to close by May 2007.
Source: Aareal Bank