Four subsidiaries of German landlord Demire Deutsche Mittelstand Real Estate AG are filing for insolvency after failing to repay a loan.
 
The property companies couldn’t reach an agreement with creditor DZ HYP AG for a standstill or orderly repayment of an €82 million loan that was due on June 30. The four property companies will therefore file an insolvency application, Demire said in a statement on Monday. 

The loan had been taken out to finance the Limes real estate portfolio, which includes four office buildings in German cities ranging from Essen to Cologne and was acquired by Demire in 2019, according to a presentation on Demire’s website. 

The insolvency of the subsidiaries comes while Demire is in the middle of restructuring its debt as it faces a maturity later this year on its high yield bonds. Shareholder Apollo Global Management said last month it would provide up to €100 million to help finance a partial buyback of the notes.

As part of that agreement, Demire would also repay a portion of the bonds at par, as bondholders would agree to extend the maturity of the remaining bonds. The proposal has the support of an ad hoc group of bondholders and an additional set of noteholders. 

As part of the refinancing, Apollo was also due to take measures freeing up liquidity for the company of €120 million, originally earmarked for large capex investments for the Limes portfolio. That could have included a transfer of the Limes entities to a separate unit controlled by Apollo and outside of the reach of bondholders. 

Demire specialises in commercial real estate, with a focus on office properties, in mid-sized cities across Germany. 

  - Bloomberg