2.4 bn Euro NPL transaction of Eurohypo

Eschborn. Eurohypo and Citigroup today announce a strategic alliance, which includes GMAC Commercial Mortgage (GMAC CM),for the acquisition of German non-performing mortgage loans (NPLs) and a related joint venture for servicing.

Instead of selling its non-performing loans to an investor, Eurohypo has formed an alliance with Citigroup and GMAC CM that allows them to combine their strengths and expertise to effectively access and compete in the German market for acquiring and servicing non-performing mortgage loans. Further initiatives may be developed in the future in areas such as real estate financing.

The alliance is based on a sale of non-performing residential mortgage loans by Eurohypo’s retail banking unit to a newly founded asset company established for this purpose. The asset company is 33% owned by Eurohypo, with a consortium of Citigroup and GMAC holding the balance. The loan volume of this transaction (including accrued interest) amounts to approximately 2.4 bn Euro and includes approximately 14,000 mortgage loans coming exclusively from the private client business of Eurohypo. About 55% of the properties financed herewith are located in Western Germany, and 45% are located in Berlin and Eastern Germany. As a result of this transaction, the NPL volume in Eurohypo’s private client business was reduced to approximately 1.4 bn Euro. Terms of the acquisition were not disclosed.

In addition, the banks have agreed to found a loan servicing company, Opus Servicing Advisors, which will act in the market as a servicer of non-performing loans for its owners as well as third parties. A well-established and fully operational team of about 150 experienced employees will transfer from Eurohypo to the new loan servicing company. This smooth transition will enable the Company to operate effectively from day one. Eurohypo and the Citigroup-led consortium will each hold 50% of Opus Servicing Advisors.

"Eurohypo is proud that jointly with Citigroup we have created an innovative and strategic business model that has substantial competitive advantages in a nationally and internationally promising market," said Bernd Knobloch, CEO of Eurohypo.

For Randolph Barker, Co-Head of Global Fixed Income in Citigroup’s global corporate and investment banking group, the association with Eurohypo creates excellent opportunities to invest in the German NPL market. "In addition, this joint venture is a good starting point for developing further co-operation in real estate financing," Barker said.

“Furthermore, this transaction underscores our strong commitment to Germany and provides another opportunity for us to increase our role in the German financial sector as it continues to develop and grow,” said William Mills, Chairman and CEO of Citigroup’s global corporate and investment banking group in Europe, Middle East, and Africa.

Press Contact:

Eurohypo AG
Corporate Communications
Siegfried Guterman
Telephone 0049.69.2548 22039
mailto:Siegfried.Guterman@eurohypo.com

Citigroup Global Markets Deutschland
Corporate Communications
Monika Schaller
Telephone 0049.69. 1366 5104
mailto:Monika.schaller@citigroup.com