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German Bad Bank Sells U.S. Loans With $1.2 Billion Nominal Value

FMS Wertmanagement, the bad bank formed by Germany to wind down failed lender Hypo Real Estate Holding AG, sold U.S. property loans with a nominal value of $1.2 billion.

The transaction reduces FMS’s U.S. portfolio to $800 million, the Munich-based company said in a statement today. The assets were bought by Deutsche Bank AG, a person with knowledge of the deal said. The person asked not to be identified because the information is private.

Hypo Real Estate, once Germany’s second-largest commercial property lender, transferred assets to FMS as part of a government bailout. The company needed the rescue after its Dublin-based unit, Depfa Bank Plc, couldn’t raise financing as the bankruptcy of Lehman Brothers Holdings Inc. froze credit markets.

FMS took advantage of “the currently favorable market conditions in the United States, featuring strong liquidity and heightened investor interest,” according to the statement.

A spokesman for FMS declined to comment on the buyer of the U.S. loans. A Deutsche Bank spokesman also declined to comment.

The sale, managed by Los Angeles-based CBRE Group Inc. (CBG) consisted of 15 transactions of mostly performing loans in U.S. cities, according to the statement. The loans are backed by offices, shopping centers and hotels.

To contact the reporter on this story: Dalia Fahmy in Berlin at dfahmy1@bloomberg.net

To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net Andrew Blackman, Ross Larsen

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