When the portfolio was transferred from the HRE Group in October 2010, the Commercial Real Estate segment comprised over 3,500 individual exposures and more than 1,600 counterparties, thereby making up around half of the total portfolio measured by the number of exposures and counterparties. Conversely, at EUR 27.2 billion, it only accounted for around 15% of the nominal value. At the end of 2016, the number of exposures and counterparties was down by around 92% in each case to 291 exposures and 121 counterparties. The nominal value of the Commercial Real Estate segment was just EUR 3.1 billion at the end of 2016 and therefore roughly 11.4% of the original amount. This makes it the portfolio segment to have so far been unwound the most. This is due primarily to the shorter maturities and the positive trend in many real estate markets, which have been supportive of unwinding at maximum value.
Two examples of successful unwindings in 2016:
- Since the portfolio was transferred to FMS-WM, the CRE unit had to deal with a number of relatively small receivables, including numerous loans for multiple occupancy dwellings and apartments, many of which originated from HRE’s predecessor institutions. The individual receivable from more than half of all borrowers was less than EUR 250,000. The labour-intensive portfolio was also weighed down by payment arrears and defaults. In 2015, FMS-WM initiated a project aimed at a portfolio sale of these receivables, which added up to around EUR 300 million in total. The purchase agreement was signed at the end of April 2016. This sale enabled FMS-WM to divest itself of a fragmented sub-portfolio where the ongoing costs were disproportionate to the income generated from it.
- The sale of a portfolio of commercial real estate centred on the Benelux countries was also completed successfully. This comprised ten exposures amounting to a nominal receivable of almost EUR 600 million. The loans were secured by a total of 72 properties, mainly office buildings, 66 of them in the Netherlands. The very at-risk portfolio had a high vacancy rate. Following an extensive due diligence process involving some 50 potential bidders and after intense negotiations, the contract was signed with the highest bidder in October.