Deutsche Bank is seeking to recover money it lent to build one of Hollywood's largest studio empires, as its borrower, Hackman Capital Partners, is forced to auction off properties to repay creditors.
Germany's largest lender was one of the biggest financiers of the American film industry in the early 2000s, lending huge sums that helped fund several landmark productions. After the 2007-2008 financial crisis, it cut off that financing and demanded repayment of outstanding loans.
Paramount deal collapse
The Hollywood Reporter reported at the time that Deutsche Bank was forced to permanently close its dedicated film financing division, cancelling a $450 million agreement with Paramount Pictures in the process.
Return to Hollywood in 2019
Deutsche Bank tried to re-enter the Hollywood market in 2019, after nearly a decade away, by lending to real estate company Hackman Capital Partners. The bank believed the rise of streaming services would drive growth in film and television production.
Hackman Capital Partners bought Manhattan Beach Studios that year for $650 million, with Deutsche Bank providing around $250 million in financing. The firm then acquired Television City, the long-running Los Angeles studio complex, from broadcaster CBS for $750 million with the help of a $350 million mortgage loan led by the German bank.
Kaufman Astoria acquisition
Two years later, near the height of the streaming boom, Deutsche Bank led a $340 million syndicated loan to finance the acquisition of Kaufman Astoria Studios in New York, one of the oldest film studios in the United States, by Hackman Capital Partners and Affinius Capital.
The deal turned Hackman Capital Partners into the largest independent owner of film studios in Hollywood, with a portfolio stretching from Los Angeles and New York to London and Dublin.
Streaming bet fails to pay off
According to the Financial Times, Deutsche Bank's investment failed to pay off, as streaming services did not boost the film industry but instead had the opposite effect. A drop in film production during the pandemic, combined with the 2023 Hollywood strikes, pushed Hackman Capital Partners into defaulting on its obligations.
The company went from a Hollywood giant to a defaulter within a short period, and is now forced to auction off properties it had bought in order to pay back its lenders.
Race to recover funds
Deutsche Bank is among the creditors hoping to be repaid first, followed by other lenders including investment firms HPS Investment Partners and Oaktree Capital, as well as Wall Street bank Goldman Sachs.
