Private Equity Firms Make Huge Dividend On … A Property Lender
Real estate lenders have been in the news for the past year because of problem loans and shrinking profits.
But the owners of German specialist property bank Aareal are about to pay themselves a €1.9B, or £1.6B, dividend.
Alongside financial results, Aareal said it would pay the dividend to owners, including Centerbridge Partners and Advent International, following the sale of its software unit Aareon to TPG for €2B last year.
That took profits for 2024 to €2.2B. Aareal said it would retain €300M to invest in the business and pay out the rest.
Aareal, which lends in Germany, the U.S. and the UK, said that profitability in its core business had also improved outside of sales of units. It made a €33M operating profit in the fourth quarter of 2024, up from €1M in Q4 2023.
It still took loan impairment charges of €400M in 2024, but that was down 22% on the previous year.
Aareal has a property loan book of €33.5B, which it said it wants to grow to €37B by 2027. It made €11B of new loans in 2024, ahead of its expectation of €8B to €9B. To grow, it will need to look at alternative real estate sectors, it said.
The average loan-to-value ratio of its property loan book is 54%, and the average margin on its loans is 270 basis points.
