HSH Nordbank AG
Peter Axmann - HSH Nordbank
Axmann highlights various developments and prospects in individual property types: “The most sought-after properties in Germany are still prime location commercial buildings and specialist store centres in growing cities. The market value for decentralised shopping centres, department stores and commercial buildings, on the other hand, is likely to decline in the medium-term. Even today, weak or decentralised locations cannot offset the pressure of online retail.”
Another bank flexing its muscles again after having its horns clipped during the financial crisis is northern German public sector bank HSH Nordbank, which has been making a renewed push into real estate lending after earlier retreating from many of its traditional lending markets.
The bank is 85% owned by the German states of Hamburg and Schleswig Holstein, and as one of the world’s biggest shipping financiers has been suffering from a slump in the shipping industry for years. The emphasis is now back on real estate, and the bank is beefing up its regional presence throughout Germany to cope with demand. The real estate division, unlike its parent bank, is not negatively impacted by write-downs on loans from Austrian ‘bad bank’ Heta.
Michael Windoffer, Head of National Business for the bank’s real estate division, told REFIRE at the MIPIM in Cannes recently that the bank had well exceeded its target of €3.6bn for new business last year by underwriting €4.1bn, without extensions, up from €2.8bn in 2013. Two thirds of this business was outside the bank’s traditional core geographic lending region of Hamburg and Schleswig-Holstein. A third of the business was with international clients, a traditional strength of the bank, with about 45 new clients last year, and a third of the business was in developments.
The target for new business this year is €3.5bn, a conservative figure but not untypical of many of the larger lenders, who are warning of lower lending figures this year given the plentiful competition and ever-tightening margins.
To support the growth the bank re-opened an office in Frankfurt, hiring Stefan Hoenen, who arrives from Helaba, and Thomas Herschinger. Apart from its head offices in Hamburg and Kiel, the bank also has branch offices in Berlin, Düsseldorf/Cologne, Hanover, Stuttgart and Munich.
At the opening of the Frankfurt office, Peter Axmann, HSH’s Global Head of Real Estate, commented: “We surpassed our target for new lending last year but are nevertheless not planning expansion this year as more equity-rich investors are entering the market and lender competition is increasing.” Part of the reason for overshooting last year’s target was the above-average rate of early repayments, he added.
The opening of the Frankfurt office is designed to support the bank’s growing focus on regional developers and investors, and to deepen connections with Asian investors entering the market, for whom Frankfurt is a logical stopping-off spot, said Axmann. “Asian investors like to come to a new market well-prepared,” he commented. “They have been looking and researching the German property market and made a first few investments over the past two years. That activity will rapidly increase this year and next, especially from China, South Korea and Singapore.”
The new Frankfurt office will be expected to pull its weight, along with the other branch offices, said Axmann, pointing out that the branches normally bring in €200m-€500m in business each year. Ticket size is between €10m and €150m, with the average loan size last year being about €30m. With an overall loan book of €10bn, the bank’s sectoral breakdown is 40% office, 30% residential and 25% retail.
Over the past weeks HSH Nordbank has confirmed nearly €300m of new loans on German real estate projects. The bank is financing €117m for the Intelligent Quarters in Hamburg’s HafenCity, a 32,000 sqm project being developed by ECE Projektmanagement and Strabag Real Estate including offices, retail and residential, and due for completion in mid-2017.
The bank is also lending €55m with the Kieler Förde Sparkasse as junior partner with €10m financing to the Schlossquartier project in Kiel, a six-building complex including 1,400 sqm of commercial properties and 213 apartments with 17,500 sqm in a downtown location near the Kieler Schloss and the Nikolaikirche.
In the retail sector, HSH Nordbank is solely refinancing €120m for a 16-centre portfolio owned by Morgan Stanley Real Estate and the Hamburg-based asset manager Redos Real Estate. The loan period is four years. Most of the assets are in Lower Saxony and North Rhine-Westphalia, and encompass about 200,000 sqm of lettable space. Two thirds of the space is let to established retailers such as Metro, Rewe and REAL on long-term leases.
