Corestate continues to drive transformation and again makes impairments in the Real Estate Debt segment

Frankfurt, 14 June 2022 – The further increase in uncertainty in the real estate sector is currently leading to a decline in transaction volumes in the overall market due to the high dynamics of the interest rate and inflation spiral. This is linked to an extension of valuation spreads for real estate across almost all risk and asset classes. On the corporate side, this raises the burdens on the operating business and results in an increase in valuation risks. In the further course of the year, value adjustments for properties and an increase in risk provisions in accordance with IFRS 9 for individual balance sheet items in the Corestate Group cannot therefore be ruled out.

In parallel, the Management Board has again significantly extended the cost-cutting measures already in progress. The aim is to achieve a structural adjustment of the Group by the end of the year, transforming it into an efficient and effective investment house with a focus on real estate equity and debt. At present, operational areas are being bundled on the cost side, duplicate functions and overheads are being consistently eliminated, offices are being closed and all non-personnel costs and other expenses are being put to the test.

In its meeting today, the Management Board has decided to recognize impairments on the goodwill and brand value as well as a risk provision for outstanding performance fees and bridge loans of Helvetic Financial Services (HFS) in the total amount of approximately € 392 million. The starting point for the Management Board was the decision of the independent fund manager (Kapitalverwaltungsgesellschaft) to suspend the redemption of unit certificates for the Stratos II fund advised by HFS until further notice and to prepare a possible restructuring and continuation of the fund. In the light of the major financial significance of the fund for HFS’s short to medium-term business prospects, this subsequently leads to a strategic reassessment and adjustment of the corresponding balance sheet items. In addition, the Management Board has decided in view of the significant deterioration in the macroeconomic environment to adjust the goodwill of Corestate Bank by approximately € 61 million as well.

Beyond the operational and market challenges, safeguarding liquidity and reducing debt are top priorities for the Group. Against the backdrop of the tense situation on the global financial markets, the Management Board has therefore mandated advisors for the two upcoming short-term maturities of a convertible bond in the amount of € 180 million due in November 2022 and a senior bond in the amount of € 298 million due in April 2023 in order to explore a refinancing solution with the bondholders.