How Germany's most conservative investors ended up in mezzanine property debt

A series of lawsuits now before Frankfurt Regional Court is shedding new light on one of Germany's more unusual real estate investment failures. Research by NDR, WDR and the Süddeutsche Zeitung has established that at least 17 statutory health insurance funds and associations of panel doctors (KVen) invested in financial products linked to the Verius property funds, incurring confirmed losses exceeding €170 million. Sources within the financial firms involved suggest total investments may have exceeded €500 million, although not all institutions have disclosed the extent of their exposure.

To understand how those losses occurred, it helps to understand what Verius actually did.