GERMANY - A consortium of German banks has stepped in at the eleventh hour to provide Hypo Real Estate, a provider of loans and financing to real estate purchases and funds, with assets to meet its financing obligations.
A statement issued today by Georg Funke, chief executive of Hypo Real Estate Group, said the firm has "secured a major new credit facility which is designed to shield the company from the impact of the current malfunctioning of the international money markets".
The exact amount of the credit facility secured over the weekend has not been disclosed though though it is understood the €395bn German global property financial services group, Hypo Real Estate (HRE) will receive €35bn payable in two instalments, following short-term funding troubles its recently-acquired Dublin-based subsidiary, DEPFA Bank, has run into.
The first instalment is from the private sector worth €21bn while the German taxpayer will foot the remaining bill for €14bn in the second.
HRE's multi-billion euro loan is only available over the short to medium-term to cover its funding "well into the future" but should mean the group "would not need to go back to the unsecured money market for its refunding in the foreseeable future" according to officials.
In practice, this mean the companies who have recently signed real estate-related loans and financing deals with Hypo Real will be unaffected by any pressures on the company's bid to hold sufficient financing of any deals signed.
Had the company gone under, however, the situation could have been very different as Hypo Real Estate Bank AG and Hypo Real Estate Bank International AG have recently supplied financing to the likes of real estate firm Whitehall, Morgan Stanley - through its Oakwood offering - ProLogis, the Invesco European Hotel Real Estate Fund and Aviva among others.
While this deal is especially important to the institutional real estate market, it is also just one of several financing deals secured over the last few days.
Iceland's national bank has today announced it has nationalised the country's third-largest bank, Glitnir Bank, and bought a 75% stake in the firm for €600m to protect its depositers and savers.
Similarly, the UK government has part-nationalised Bradford & Bingley and signed a deal with Banco Santander Group to transfer its savers and depositors.
And Denmark's Roskilde Bank, which was temporarily placed under government ownership, is now being broken into pieces to be bought by Nordea, Spar Nord and Arbejdernes Landsbank.
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