German real estate lender Westimmo has applied for billions of euros in German state aid as a way of sweetening the auction process for the unit, according to media reports. The aid request in the form of bridge financing guarantees aims to help prevent potential buyers from suffering a ratings downgrade if they make an offer, sources told news wire Reuters.
German real estate lender Westimmo has applied for billions of euros in German state aid as a way of sweetening the auction process for the unit, according to media reports. The aid request in the form of bridge financing guarantees aims to help prevent potential buyers from suffering a ratings downgrade if they make an offer, sources told news wire Reuters.
PropertyEU revealed last week that Blackstone, Apollo, Aareal and Terra Firma are all thought to have submitted bids, according to those who track the market. Bernhard Kluge, a director at Citigroup in Frankfurt who is advising on the sale, declined to comment.
WestLB has said that it is primarily interested in selling 100% of the shares in WestImmo for cash. Bidders may, however, suggest an alternative acquisition structure which results in a majority participation of the bidder in WestImmo, or in an entity which absorbs WestImmo, the bank has said.
Aareal Bank and WestLB declined to comment. WestLB has said that several interested parties are circling WestImmo which the regional public-sector bank is being forced to sell in exchange for European Union approval of a government bailout of WestLB.
There is no current book value published for WestImmo but at the end of 2008, WestLB valued it at EUR 850 mln. However, offers are likely to be below book value, causing concern that a fire sale could be on the cards, according to those who track the market. WestLB must sell WestImmo to meet European Commission demands for a radical restructuring in exchange for approving a bailout. WestLB has to find new owners by 2011.
Last year, the bank increased its lending commitments in commercial property financing to EUR 6.2bn, 13% up on the previous year (EUR 5.5 bn). Only 12.5% of total new business related to loan extensions. The bank's operating profit was EUR 147.7 mln, a slight increase on €141.8mln the previous year. Total assets were EUR 27.2 bn as of 30 June 2009.