The Wall Street Journal-20080116-Hypo Books Subprime Losses
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Hypo Books Subprime Losses
Germany-based Hypo Real Estate Holding AG lost more than one-third of its market value after it booked U.S. subprime-mortgage-related losses. The company also announced it will miss its target for return on equity and slashed its dividend.
The company's shares closed down 35% at 21.64 euros ($32.18), a decline of 11.74 euros.
Hypo gave a positive outlook for 2008, but investors punished the real-estate financing company for its failure to communicate problems, analysts said.
The company, which was spun off from Germany's HVB Group in 2003, said a revaluation of its U.S. portfolio of collateralized debt obligations resulted in 390 million euros in impairment charges in the fourth quarter.
Hypo said it would miss its 12% return-on-equity target for 2007 and cut its dividend to 50 European cents from 1.50 euros in 2006.
