A private equity consortium is set to buy a 25% stake in one of Europe’s largest property lenders for more than €1.1bn (£890m).

German-based Hypo Real Estate revealed today that it had received an offer from a consortium to buy 25% of its shares for €22.50 (£18.13), a 22% premium to its closing price yesterday.

The consortium is made up of US JC Flowers, Japanese Shinsei Bank and real estate specialist Grove International Partners.

Welcome offer

Hypo’s management said that in principle it welcomed the offer, and would provide an in depth statement on the proposal in due course.

Hypo shares jumped 24% to €22.87 (£18.43) in the wake of the news. Its shares dropped 35% from €33.38 (£26.89) in January after it announced unexpected writedowns related to US subprime mortgage investments.

Shoring up balance sheets
At the end of 2007, Hypo had a property loan book with a value of €65bn (£54bn).

In the wake of the credit crunch, banks are increasingly looking to shore up their balance sheet through outside investment. UBS is planning a rights issue following more than $19bn (£9bn) of writedowns at its last quarterly results this month.