Fitch: No Rating Impact on Aareal's Pfandbriefe from Westimmo Buy
Westimmo is a commercial property lender and Pfandbriefe issuer, planned to be acquired from Erste Abwicklungsanstalt (EAA, AAA/Stable/F1+). The transaction is expected to close in 2Q15, subject to approval from supervisory and competition authorities. Aareal and Westimmo each runs a mortgage and a public sector Pfandbriefe programme.
German Pfandbrief legislation does not generally allow a bank, ie a legal entity, to run two Pfandbriefe programmes of the same cover asset type. However, it is possible to have different Pfandbriefe issuers in the same bank group as is the case for COREALCREDIT BANK AG (COREALCREDIT) - a subsidiary of Aareal - which is also a Pfandbriefe issuer. As long as the Pfandbriefe programmes are not merged, there will be no impact on Aareal`s Pfandbriefe ratings.
However, should Aareal decide to fully integrate Westimmo into the same legal entity the respective cover pools would be merged. Fitch would then analyse the combined pools and outstanding Pfandbriefe to determine any potential rating impact.
As of end-4Q14 Aareal's mortgage Pfandbriefe amounted to EUR10.8bn secured by cover assets of EUR13.5bn. Westimmo's mortgage Pfandbriefe amounted to EUR4.2bn secured by a EUR5.1bn international diverse commercial asset portfolio, which would fit into Aareal's international business model. COREALCREDIT's mortgage Pfandbriefe of EUR 2bn are secured predominantly by German cover assets of EUR2.4bn.
Aareal`s public sector Pfandbriefe amounted to EUR2.1bn with EUR2.3bn cover assets. Westimmo's public sector Pfandbriefe amounted to only EUR0.7m with solely German asset exposure. COREALCREDIT's public sector Pfandbriefe amounted to EUR0.2bn with EUR0.3bn cover assets.