When the transfer took place on 1 October 2010, the Commercial Real Estate portfolio had a nominal value of EUR 27.2 billion. By the end of fiscal year 2015, it had been reduced by 81% to a nominal value of just EUR 5.2 billion. Some of the successful winding-up operations and restructuring measures in 2015 are summarised below:

  • In the middle of the year, a severely non-performing portfolio of commercial real estate loans in Portugal and Spain was sold at a price above the book value. Of the outstanding loan receivable of almost EUR 550 million, approximately 38% was non-performing and 42% at increased risk. The loan portfolio contained what were in some cases prominent properties, such as two luxury hotels, one of them in Barcelona, the other in the Portuguese coastal resort of Cascais. On several occasions, the transaction was on the verge of falling through as complex tax issues made it difficult to close the transaction and required lengthy negotiations with the bidders regarding the structure of the sale.
  • In Mexico, the loan on a luxury hotel was sold at a price above the book value. For a long time, it did not look as if that would happen, as disagreements with a co-investor, interference from local politicians and severe hurricane damage to the property made the prospect of selling the property ever more remote. In the meantime, expert opinions indicated that, despite large write-downs already having been charged, FMS-WM would likely incur further losses in the tens of millions in the event of a rapid exit. That it did not come to this is due solely to the fact that a local strategic investor was brought on board.
  • A syndicated loan for a portfolio comprising a total of 57 German retail properties was successfully wound up. This was a complex securitised finance structure for which the properties held by various real estate companies served as collateral. These were primarily DIY stores and supermarkets, but also included a hospital building. The geographic focus of the properties was Saarland, Rhineland-Palatinate and Baden-Württemberg. Overall, FMS-WM held the clear majority of the structure, comprising around two thirds of a better collateralised senior tranche and the entire subordinated junior tranche. The original equity provider had already completely lost its investment due to the change in value and business performance thus far. In 2015, after assessing the market opportunities and analysing the portfolio, FMS-WM initiated a sale process, in which several bidders took part. The sale price achieved was around 10% higher than the value of the collateral calculated by an appraiser.

 

20160425 übersicht FMS WM Real Estate Segment EN