Final bidders sought for WestImmo sale

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EAA Erste Abwicklungsgesellschaft, the Düsseldorf-based ‘bad bank’ established by the government to wind down the assets of WestLB, including its real estate lending subsidiary WestImmo, set a new May 30th deadline for investor expressions of interest for WestImmo after its first attempt to sell the lender fell through in 2011.

WestImmo was put on the selling block by its erstwhile parent under the terms of the WestLB restructuring imposed on the landesbank by the EU in return for government subsidies granted to bail out the bank during the financial crisis. JP Morgan Chase has been mandated to handle the sale.

The Mainz-based WestImmo has €9.7 billion in property loans, including €7.7bn in commercial property and €2bn in residential. Although not allowed to write new business, most of the WestImmo loans ARE performing, and the bank actually posted a 2013 net profit of €50m, which should help shore up its marital prospects. EAA’s shareholder equity is likely to be of the order of €575m after stripping out certain loan portfolios, not eligible for Pfandbrief-refinancing, when the sale is consummated. The bank, which primarily refinances itself by the issue of Pfandbriefe, still has 290 employees.

Back in April, Matthias Wargers, EAA’s CEO said that the workout bank was “currently in negotiations on the sale with several interested parties.” Among those known to have been interested in WestImmo last year were PIMCO and ING Bank, while WestImmo’s near neighbour Aareal Bank dropped out and instead bought Corealcredit Bank in Frankfurt from turnaround specialist Lone Star for €340m. Among the six or seven likely suitors is also thought to be Starwood Capital, which manages the world’s largest mortgage REIT in the US.

Back in 2011 a deal for the sale was in advanced stages with New York-based Apollo Global Management before falling through. EAA said at the time its preference was for a long-term owner for WestImmo, who was itself able to fund the acquisition through long-term financing and would continue to run WestImmo as a German Pfandbrief-issuing bank. (The prospective deal with Apollo essentially collapsed over these differences, we recall).