Aareal Bank AG has sold another portfolio of non-performing loans, with an aggregate volume of approx. €388 million (including 36 million in interest and fees) to Shinsei-Bank, Limited. In the course of this year, Aareal Bank has reduced its nonperforming loan portfolio by approx. 1 billion overall. The transaction will not burden net income.
Dr. Wolf Schumacher, Chairman of the Management Board of Aareal Bank, qualified the sale of the portfolio as "yet another major milestone" in the reduction of the bank's NPL portfolio: "This core element of our six-point realignment programme is crucially important to gain flexibility in our core Structured Property Financing business. The relief on capital means that we can use more of our equity in a targeted way, to generate further highly
profitable new business", Dr. Schumacher added.
The portfolio sale 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 exposure remains with the bank. The transaction, which is scheduled for completion by the end of February 2006, is Aareal Bank's second true sale involving non-performing loans this year.
Under the terms of the transaction, the investor acquires 142 loans relating to a total of 157 properties. The portfolio consists exclusively of nonperforming loans to institutional cients, relating to equal proportions of German commercial properties and commercial housing properties.
Dr. Schumacher said that the bank "continues to see strong demand by international investors for transactions of this kind", adding that Aareal Bank is well placed to capitalise on this trend. He concluded by reaffirming that Aareal Bank will continue to accelerate the reduction of its NPL portfolios.
Source: Aareal Bank