The possible insolvency of German department-store operator Arcandor AG could have an impact on a property-investment consortium led by the Whitehall Funds, which owns a 51% stake in a portfolio that includes 85 of the retailer's Karstadt stores as well as other properties.

Some of the buildings are among Germany's top retail locations, such as the KaDeWe store in Berlin or the Oberpollinger store in Munich. Goldman Sachs Group Inc.'s Whitehall Funds owns a 51% stake, while a consortium that includes RREEF Alternative Investments, the property fund of Deutsche Bank AG; Pirelli & C. Real Estate SpA; and the Borletti Group acquired the rest in 2007.

The property investors, referred to as the Highstreet consortium, are in negotiations with Arcandor, which posted a €745.7m ($1.04bn) loss in its 2008 fiscal year ended 30 Sept and faces a deadline of 12 June to gain an extension on €650m of debt. Arcandor also is applying for a €200m loan from KfW, the German state-owned development bank.

Wall Street Journal