Versorgungswerk der Zahnärztekammer Berlin (VZB), the pension fund for dentists in Berlin, has replaced a high-interest loan from Apollo Global Management with direct financing to shield its portfolio from potentially higher risks.
Apollo had granted a loan of approximately €83m to the pension fund’s Engel & Völkers Leisure Hotel Fund, according to VZB’s management committee’s statement to the supervisory committee. VZB said it was legally obliged to service the loan.
“Failure to do so would have caused significant financial damage. The repayment of the loan and direct financing were therefore necessary to protect assets and avert imminent risks,” the pension fund said.
The fund highlighted that failing to meet existing obligations could have forced the sale of hotel properties in Ibiza, Sardinia, and Roxburghe in Scotland at prices significantly below market value.
EV Asset Management, a licensed partner of Engel & Völkers, bought the three luxury hotels for the newly launched EV Leisure Hotel Fund 1 from the group in 2022, with a combined value of roughly €280m. A year later, Magna Asset Management, which managed VZB’s real estate master fund, acquired EV Asset Management.
Supervisory questions
VZB, which faces €1.1bn in losses largely linked to loan financing, initially sought regulatory approval to take over the Apollo loan.
The Berlin Senate Department for Economics, VZB’s supervisory authority, decided against the move. However, after the Apollo loan payment deadline passed, VZB proceeded with repayment to fulfil binding obligations.
“The decision was made to protect the pension fund’s financial interests, due to existing obligations and significant economic risks associated with non-compliance,” VZB said.
No regulatory action was taken against VZB after the loan replacement, the pension fund added.
