| FRANKFURT, July 7
FRANKFURT, July 7 German property lenders Aareal
and Berlin Hyp have joined a bidding battle
for peer Westimmo in a deal potentially worth more
than 300 million euros ($410 million), people familiar with the
Erste Abwicklungsanstalt (EAA), the 'bad bank' tasked with
winding down assets of failed German lender WestLB,
has chosen several bidders to submit offers for Westimmo by an
August deadline, one of the sources said.
Investors have been attracted to Germany's real estate
sector in recent months by the reliable income stream that
property projects typically offer and by higher yields than
those on German sovereign bonds. Investors are also betting on
rising property prices in Europe's largest economy.
Private equity investors such as Blackstone, KKR
and Apollo had also expressed their interest in
the mortgage bank by late May, the sources added.
EAA, which aims to sell the lender by the end of the year,
said it had received a dozen expressions of interest for
Berlin Hyp was not immediately available for comment while
bidders declined to comment. JP Morgan, which is
organising the sale, also declined to comment.
Some contenders are offering to pay more than 300 million
euros or 'a bit more than half' of Westimmo's common equity of
575 million euros, another of the sources said.
The renewed attempt to sell Westimmo comes more than two
years after exclusive talks with private equity investor Apollo
failed in late 2011.
Mainz-based Westimmo posted a net profit of 50 million euros
in 2013. Its asset sheet total stood at 13.8 billion euros as of
December last year. The lender is due to publish its six-month
figures by the end of August.
EAA took over billions in assets from public-sector lender
WestLB, which was broken up in 2012 after trading scandals and
losses led to repeated bailouts by its owners.
The European Commission, tasked with making sure that state
aid does not hamper competition, had originally asked for
Westimmo to be sold by the end of 2011 as part of its conditions
for WestLB's latest bailout.
But after the deal with Apollo fell through, Westimmo was
transferred to bad bank EAA. Westimmo has not underwritten any
new business since, but is instead running down its existing
Banks have also sought exposure to Germany's vibrant
property market by buying real estate lenders.
Last year Aareal bought rival Corealcredit from
U.S. investor Lone Star for 342 million euros to bolster its
commercial real estate mortgage business in its home market.
($1 = 0.7331 Euros)
(Additional reporting by Kathrin Jones; Editing by Thomas