Carlyle Faces German Real Estate Writedown

HANOVER, Germany (Reuters) – Private equity firm Carlyle Group is facing a writedown of about 50 million euros ($65 million) on a real estate project in Germany, a source familiar with the situation told Reuters on Monday.

Carlyle declined to comment.

According to the source, Carlyle and German bank Landesbank Berlin (LBB) (BEBG.DE) have been unable to come to terms on the amount of equity required for the Linden Park centre renovation project in the city of Hanover in northern Germany.

The source said Carlyle had offered to raise its equity contribution by a fifth but LBB still regarded the project as too risky and failure to come to terms means that the company handling the over 200-million-euro renovation is threatened with insolvency, with proceedings expected to commence later on Monday.

An LBB spokeswoman declined to comment on customer relationships but said the bank was working with the city of Hanover to find a constructive solution for the project. The city of Hanover declined to comment.

Announcing the deal in October 2006, Carlyle said it had made the investment from its Carlyle Europe Real Estate Partners II fund and that project financing was provided by LBB.

In January the Hannoversche Allgemeine Zeitung newspaper said that construction firms involved in the project had started removing materials from the site because of payment arrears. (Reporting by Ralf Banser and Arno Schuetze; Writing by Peter Starck)