Aareal taps rescue fund for EUR 525m

Property financier Aareal Bank is tapping the German bank rescue fund SoFFin for EUR 525 mln to strengthen the company's balance sheet, even though it announced an unaudited pre-tax profit of EUR 117 mln for 2008.

CEO Wolf Schumacher explained: 'We are taking proactive measures to ensure we will weather future challenges and emerge strengthened as we continue to follow our successful business model in the interest of our clients, investors and employees.'

Aareal, which is listed on Deutsche Borse's MDAX index, said the strengthening of its capital base through a silent participation by SoFFin would help its Tier 1 ratio to rise significantly. In addition, Soffin has agreed to grant Aareal Bank a guarantee facility for new, unsecured issues with a maximum maturity of 36 months for a total volume of up to EUR 4 bn.

The bank said its performance in 2008 validated its business model and there would be no changes to its corporate governance structure. Aareal Bank said the fourth quarter results were also positive. In a statement, Aareal bank said that the fourth quarter of 2008 was the most challenging quarter the financial sector has seen in decades. However, the firm added: 'Aareal Bank Group posted a profit before taxes of EUR 11 mln. This means that Aareal Bank Group has remained profitable in every quarter since the onset of the financial market crisis in summer 2007, on a group level as well as in each of its two business segments, Structured Property Financing and Consulting/Services.'