Financing Commercial Real Estate Investments iGin Germany hyp.pdf · DG HYP most active CRE lender in Germany in terms of 1921 1949 1990 1996 2001 2008 2012 core business: private

Financing Commercial Real Estate Investments i Gin Germany

Steffen Guenther June 2015Head of Commercial Real Estate FinanceInternational & Institutional Clients / Syndication

Overview of the German Banking Systemg y

Private Banks Cooperative Banks(member/client owned)

Savings Banks(mostly owned by muncipalities)

about 1,080 Volksbanken or

Raiffeisenbanken

about 400 banks:- listed- privately owned- subsidiaries of foreign banks

about 420Sparkassen

7 regional Landesbanken2 central banks:

DZ BANK and WGZ BANK

balance sheet in EUR bn:all VR banks 763

balance sheet in EUR bn:Deutsche Bank 1,611

1 central bank: DekaBank

balance sheet in EUR bn: all savings banks 1,112

DZ BANK 387WGZ BANK 91DG HYP 50

,Commerzbank 550HypoVereinsbank 290Postbank 162

g ,LBBW 274BayernLB 256NordLB 201

DG HYP - Professional partner for commercial real estate finance 2

Commercial Real Estate is (still) predominantly financed by specialisedFinancial Institutions

• Highly liquid debt market: Banks, Insurance Companies, Debt Funds

• Why traditional bank finance of Commercial Real Estate? Stability, long-tem commitment as balance sheet lender, relationship banking

• Focus solely on Commercial Real Estate Finance high degree of market and assetclass expertise

• Emphasis on the property and its economics

• In a „normal“ interest rate environment: very competitive refinancing platform through coveredbonds („Pfandbrief“)

• „Pfandbrief“ regulated by German Pfandbrief Act strict rules and quality requirementsapply to „Pfandbrief“ eligibility

3

Part of one of Germany‘s largest one-stop financial service provider:The Cooperative Financial Networkp

ca. 1,080 ×

Private Banking

Asset ManagementCommercial Real

Payment Systems

Consumer Finance

Commercial Real Estate Finance

Commercial

Securities Settlement

Insurances

Bureau de Change Transportation Finance

Investment Banking Payment Systems

Building Association M & A i itiEquity & Mezzanine Financing

Certificates


Building Association Mergers & Acquisitions

DG HYP‘s ownership structurep

About 1,080 credit unions with17 million members,30 million customers and13,200 local branches

89 %

4th largest bank in Germany

100 %

4th largest bank in Germanyaccording to balance sheet 2013

100 %

22nd largest bank in Germanyaccording to balance sheet 2013


DG HYP`s Historyy

Creation of DG HYP M 11 1921 i B liMay 11, 1921 in Berlin as a real estate bank by the PreussischeZentralgenossen-schaftskasse, Expansion of real estate

DZ BANK‘s Commercial Real Estate Finance

DG HYP most active CRE lender in

Germany in terms of

1921 1949 1990 1996 2001 2008 2012

core business:private mortgages

pactivities to the new

Federal Statesactivities transferred

to DG HYP

ynew business

volume

1921 1949 1990 1996 2001 2008 2012

Headquarter moved to H b

75 years DG HYPlargest real estate

b k ithi th

private mortgages discontinued,

f C i lHamburg bank within the cooperative banking

sector

focus on Commercial Real Estate Finance


Figures and factsg

DG HYP‘s business 2012 - 2014

mn euros 2014 2013 2012

Originated new business

Commercial Real Estate Finance 4,941 5,378 5,256

Germany* 4,709 5,328 5,060

International* 232 50 196International 232 50 196

Balance Sheet

Total assets 42,912 49,716 54,368

Loans secured by property mortgages 18,460 19,576 20,340

Public-sector and local authority loans 16,658 19,902 23,737

Pfandbriefe and other debt securities 25,518 29,332 34,084

*Location of property

core capital quota in % 9.0 10.9 8.2

7DG HYP - Professional partner for commercial real estate finance

Core areas of expertise at a glancep g

• Providing debt solutions for:Markets - International and German clients in Germany

- German institutional clients in Germany, France, UK and the Netherlands1

Types of property • Clear focus on commercial real estate suitable for third-party usage2

Financing and product principles

• Individual customised range of products and services3principles

F di • Strong funding base through covered bonds and membership in the4 Funding Strong funding base through covered bonds and membership in the German Cooperative Financial Services Network4


Individual customised range of products and servicesg p

Financing principles Range of products and services

• Individual transactions ranging from EUR 10 m to EUR 100 m per object

• Mid- to long-term financings of existing properties

• Core business in mid-volume segments

• Senior loans with collateralisation by way of real property lien

p p

• Development financing of pre-let properties

• Assuming the role of arranger, underwriter and co-underwriterreal property lien

• LTV: up to 75%, depending on the investment

• Properties suitable for use by third parties

co underwriter

• Interest rate hedges using derivatives (in cooperation with DZ BANK)

• Valuation by VR WERT


DG HYP’s current financing examplesg p

Meliá HotelBerlin

GSG PortfolioBerlin

ArvatoHanover

• 4 star superior hotel at Friedrichstrasse

• 39 objects, 1,900 tenants• Club Deal (5 banks) with

DG HYP as Lead Arranger

• 60,000 m² logistic building• construction loan and

subsequent senior loan

Kö-BogenDusseldorf

DG HYP as Lead Arranger

Telekom CenterMunich

subsequent senior loan

Holsten-GalerieNeumunster

• 2 office and retail objects• 41,000 m² lettable area

A hit t D i l Lib ki d

• 70,000 m² office space• Deutsche Telekom‘s

• 90 shops on 22,800 m²• construction loan and

b t i l


• Architect: Daniel Libeskindregional HQ subsequent senior loan

Credit Process (for single assets and small portfolios)( g p )

Pre-Clearance Term Sheet

1 - 2 weeks

Valuation & Credit Application Credit Approval

DocumentationLoan

Agreement

3 - 4 weeks

g3 - 4 weeks

2 - 2½ months(period may vary depending on complexitiy/number of assets)


Security package – common market practice and standard

L d h (fi t ki t )

y p g p

• Land charge (first ranking mortgage)

• Rent assignments

• Insurance assignment

• Account pledge

• (Share pledge)

• Assignment / pledge of hedgeg p g g

• Subordination Agreement

For developments: • Cost overrun guarantee

• Interest shortfall guarantee

• Step in rights (general contractor)

• Assignment of warranties/guarantees(construction)

12

The Pfandbrief

The Pfandbrief The Mortgage Lending Value (MLV)

• Mortgage covered bond regulated by Law

B k i li bl f t• Bank remains liable for repayment

• Secured by mortgages which are kept separate from the bank’s assets and ensure th t i f th b k’ i l

Market Value

• Defined by Ordinance (BelWertV) in connection with Federal Law (PfandBG)

the repayment in case of the bank’s insolvency

• Only 60 % of a property’sMortgage Lending Valueeligible for Pfandbrief

Mortgage Lending Value

• Whereas the Market Value reflects thecurrent value of a property at a given time,the Mortgage Lending Value reflects the minimum value of a property at any time

eligible for Pfandbrief

• Established 1769 byKing Frederick II of Prussia,not a single Pfandbrief minimum value of a property at any timenot a single Pfandbriefdefault since


Fundingg

Buyers:BanksBanksCentral BanksInsurancesPension Funds

> 60 % of MLV(unsecured amount)

≤ 60 % of MLV(secured amount)

Loans against Mortgages


Contacts

Contacts

The International & Institutional Investors Team

Head of CRE Finance International & Institutional Investors / Syndication

Steffen Günther+49 40 3334-3737 [email protected]

CRE Finance Head of International & Institutional Investors I

Thomas Neumann-Vieweg+49 40 3334-246449 40 3334 [email protected]

CRE Finance Head of International & Institutional Investors II

Verena Quast+49 40 [email protected]


Contacts

The International & Institutional Investors I Team

Thomas Neumann-ViewegHead of International & Instit tional In estors IHead of International & Institutional Investors I

+49 40 [email protected]

Mike van WanrooySenior Manager

+49 40 3334-3193 ik @d h d

Christian VossSenior Manager

+49 40 3334-3667 h i ti @d h [email protected] [email protected]

Fabian KrügerManager

Gerd HalamaSenior Manager Manager

+49 40 3334-3226 [email protected]

Senior Manager



Contacts

The International & Institutional Investors II Team

Verena QuastHead of International & Instit tional In estors IIHead of International & Institutional Investors II

+49 40 [email protected]

Norbert WiesnerSenior Manager

+49 40 3334-3776 b t i @d h d

Henning WeißerSenior Manager

+49 40 3334-2077 h i i @d h [email protected] [email protected]

Jeffrey MorrisonManager

Moafak KataManagerManager


Manager



Documents

Financing Commercial Real Estate Investments iGin Germany hyp.pdf · DG HYP most active CRE lender in Germany in terms of 1921 1949 1990 1996 2001 2008 2012 core business: private