Deutsche Rücks made clear the gravity of the situation through a major loan agreement. Rising interest rates, soaring costs, and a near-halted investment market put the project developer Centrum in severe financial trouble.
Cash flow was described as "extremely tense." Deutsche Rücks had funded the "Spreesight" center in Berlin with over 50 million euros. When the holding company collapsed, the venture teetered on the edge of disaster.
Deutsche Rücks' loan as part of a restructuring plan
In October 2023, Deutsche Rücks pledged up to six million euros. According to Handelsblatt's findings, the move was part of a broader restructuring effort. Deutsche Rücks, part of Sparkassen-Finanzgruppe, acted as lender, buyer, and client simultaneously.
The reinsurer's aim: to protect the "Spreesight" project by saving the center. Yet, its reliance on Centrum may now pose a danger.
Legal investigations into Centrum's leadership
The public prosecutor is looking into Uwe Reppegather, head of Centrum, and other executives for alleged fraud, bankruptcy, and breach of trust.
His Centrum Group's successor is now in receivership. A court on Wednesday ordered provisional insolvency administration for Centrum Development — the firm meant to manage the "Spreesight" project as a "service developer" after the initial bankruptcy.
Deutsche Rücks' investment approach and legal actions
Deutsche Rücks declined to comment on possible fallout. A spokesperson stated that investment choices are made using "all available information" and based on a thorough review of risks and opportunities.
The spokeswoman noted the same process was used for the center project. Deutsche Rücks explored multiple options with legal experts and concluded that the restructuring was the "most economically viable choice".
This is how Deutsche Rücks supported Reppegather. The relationship began in 2017 when Deutsche Rücks provided a 30 million euro loan to a project company for the Berlin property at Gutenbergstrasse 8-10. The plan was to build office and residential spaces at the Charlottenburg site.
In November 2019, the reinsurer offered an additional bridge loan of up to 18 million euros. The company intended to pass the funds to Reppegather, who wanted to buy out a partner's shares.
An extra three million euros was tied to progress in the development plan. Centrum gave Reppegather millions in loans with a 25 percent interest rate and no collateral.
Deutsche Rücks helped Reppegather strengthen control over the project. Security in the form of land charges and guarantees worth 6.5 million euros from Reppegather was put in place. However, the project didn't develop as expected.
Centrum could not secure building permits, which blocked construction financing. Despite this, Deutsche Rücks increased the bridge loan to about 21.3 million euros in the first round and nearly 24 million euros later.
In March 2022, Deutsche Rücks extended the loan term once more. By the following year, Centrum could not repay a scheduled payment. In July 2023, Reppegather's business group failed, and the owner filed for personal bankruptcy.
The "Spreesight" project involved one contract with four deals. Deutsche Rücks moved quickly to intervene. On October 27, 2023, a four-part agreement was signed: property purchase, the loan, a business agency deal, and a statement of intent.
It took over about 23.4 million euros in debt. The cost for the property was one euro. "Also read: Reppegather's case poses risks for pharmaceutical billionaire Beier."
In return, Deutsche Rücks offered Centrum Holding a loan of up to six million euros, with 12 percent interest. The loan could be repaid first and was backed by a mortgage.
The contract also warned: Centrum might not be able to "repay the loan in full or in part." The loan was conditional on Deutsche Rücks buying Gutenbergstrasse 6.