The pressure on the real estate group Corestate is increasing.
(Photo: dpa)
Zurich The listed real estate group Corestate has to cope with a loss in the three-digit million range: The group is making a value adjustment of 392 million euros in connection with the business of the Swiss subsidiary Helvetic Financial Services (HFS), as Corestate announced in a profit warning on Tuesday afternoon.
HFS is central to the bond and loan business for German real estate project developers. From Switzerland, HFS provides project developers with high-interest mezzanine loans. This is borrowed capital, usually with a short term, which in the event of insolvency is only serviced after bank loans.
Real estate developers use these loans, for example, to bridge short-term financing gaps. However, HFS usually does not bear the default risk of the loans itself, but has them packaged in fixed-income securities. HFS passes these securities on to the Stratos real estate bond funds, which HFS advises.
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