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Hypo gets another €10bn lifeline

The German commercial real estate lender, partially owned by private equity firms JC Flowers and Grove International, has secured another liquidity guarantee from the government, on top of the €20bn already promised.

Hypo Real Estate has been guaranteed another €10 billion lifeline from the German government bailout plan – on top of the €20 billion already announced.

The German commercial real estate lender said in a statement “as part of ongoing support” for the struggling company, Soffin, the German Financial Markets Stabilisation Fund, would guarantee €10 billion of additional liquidity.

The banking group narrowly escaped collapse in October after securing a lifeline from the German government and a consortium of private banks and financial institutions. The original €30 billion lifeline offered the company had to be increased to €50 billion when the full scale of Hypo's problems were realised.

Hypo is partially owned by private equity and real estate firms JC Flowers and Grove International and is one of the largest commercial real estate lenders in Europe. Recent transactions include providing €305.6 million to Pirelli Real Estate and RREEF for the acquisition of 29 buildings from Italy's ENPAM pension fund and providing €95 million for The Carlyle Group's acquisition and refurbishment of Tour Franklin in Montreuil sous Bois.

In June, JC Flowers and Grove, working with Japanese financial institution, Shinsei Bank Limited, invested €1.1 billion in Hypo for up to 24.13 percent of the firm’s shares. The consortium offered €22.50 a share for the stake. Hypo's share price has plummeted 92 percent over the past year and was around €3.10 at the time of press.