Focus returns to sale of WestImmo after strong results

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Westdeutsche Immobilienbank (WestImmo), not so long ago one of the foremost German property financiers but - since the break-up of parent company WestLB in 2012 – now 100% part of WestLB’s bad bank Ersten Abwicklungsanstalt AÖR (EAA), looks like its sale may be imminent.

The Mainz-based bank may be a beneficiary of the rapid speed at which the bad bank EAA has been shrinking its distressed loan book and dumping junk or near-junk bond, according to EAA chairman Matthias Wargers recently. He said the bad bank had managed to shrink its book by a third (€46bn) to €97.6bn in 2013, and down from over €200bn at its peak, with the reduction taking place more or less equally across all the key asset categories. The bank even posted a profit of €59m, he said, as demand for property assets continued buoyant.

The search for a suitable buyer for WestImmo has been going on for long time, and the bank is certainly attractive for a range of potential buyers. It is focused on commercial property, but has been forbidden since July 2012 under the EU diktat from writing any new business. The bank still employs nearly 300 staff and EAA is looking to sell it to a long-term as a going concern, after firstly selling nearly €1bn of assets that would not qualify for refinancing via Pfandbrief issuance.

Commenting on the bank’s recent results, Wargers said: “Once again, WestImmo has demonstrated that it is a healthy and successful real estate bank and deserves to be continued as a going concern… Concrete negotiations are currently being held on the sale with several interested parties.”

WestImmo chairman Claus-Jürgen Cohausz also commented: “Despite the suspension of new business imposed by the EU and the planned decline in interest-bearing inventories, earnings climbed significantly compared with the previous year while risk provisions were cut in half. This demonstrates the attractiveness of the bank and the very high quality of its loan book.”