HypoVereinsbank has agreed to sell sub- and non-performing real estate loans with a total volume of approximately 2.17 billion to Goldman Sachs. Both parties reached agreement on the transaction following an auction process. The portfolio comprises sub- and non-performing loans to 3.610 customers. The loans are predominantly secured by real estate: 47% relates to commercial and 53% to residential real estate located across Germany.
On the photo: HypoVereinsbank, Am Tucherpark, Munich.
"This transaction is further evidence of the steady progress we're making in reducing the RER portfolio," commented Johann Berger, member of the Management Board of HypoVereinsbank. "With this transaction we are more than half way there, and are fully on track to meet our goals. Further steps are set to follow in 2006."
The sale of the portfolio is expected to close in the second half of 2006. The portfolio sale will be via hive-down as per the German Umwandlungsgesetz. The hive-down is subject to approval by HypoVereinsbank's shareholders at their Annual General Meeting on May 23, 2006 and antitrust approval.
The deal arranger is HVBs Real Estate Structured Products/Mergers & Acquisitions unit.
HypoVereinsbank's Real Estate Restructuring unit (RER) was formed at the start of 2005 as part of a strategic realignment of the bank's German business segment. Work-out portfolios from HVB AG's German real estate finance business were pooled in RER. HVB aims to completely eliminate the portfolios allocated to this unit through various asset reduction strategies and by taking advantage of opportunities arising from further developments in real estate markets.
Initially RER encompassed loans with a volume of 15.4 billion. HypoVereinsbank has been able to reduce the portfolio through internal work-out measures by 3.7 billion as of November 2005. A first sale to Goldman Sachs in November 2005 of a portfolio of 1.8 billion helped to substantially reduce the total. This second transaction which has just been agreed with Goldman Sachs will cut back the volume in RER by somewhat more than 50%.