Hypo seeks €15bn emergency lifeline

The German commercial real estate lender is the first private sector group to ask for help from Germany’s €500bn bail-out fund. Hypo says the injection is needed while it waits for its previously-announced €50bn rescue package to come through.

Hypo Real Estate has asked for a €15 billion lifeline from the German government in a bid to cover its short-term cash-flow problems.

It comes less than a month after the commercial real estate lender was pulled back from the brink of collapse with a €50 billion rescue package provided by the German government, the Bundesbank and a consortium of banks.

In a statement, Hypo – which is partially owned by private equity firms JC Flowers and Grove International – said it had applied to the German bail-out fund, the Financial Markets Stabilisation Fund (FMSF), for €15 billion to help it with its short-term “liquidity requirements”.

The €50 billion rescue plan was in the final stages of negotiation, it added, and would be available by mid-November.

However, Hypo said it would also ask the FMSF fund for “additional comprehensive support”, including potential recapitalisation measures.

Hypo 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, private equity firms JC Flowers and Grove International, 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. JC Flowers offered €22.50 a share for the stake. Hypo's share price was around €5.11 at the time of press.