HSH Nordbank targeting €3.5bn new business this year
When the financial crisis struck, one German bank (admittedly, of a few) that had to immediately react by curbing its global ambitions was the Hamburg and Kiel-based HSH Nordbank. Even then we remember being struck by the speed at which such a sizeable bank could rein in its horns and unwind the fruits of years-long ambitions. But unwind it did, rapidly exiting non-core markets and retreating to concentrate on its traditional strengths of owner-managed companies in the Mittelstand, and businesses in its hinterland of northern Germany.
REFIRE sat down recently with Michael Windoffer, a director at HSH and head of the bank’s cross-border business, to catch up with the bank’s current strategy and lending practices. Like other German banks, HSH now consists of a core bank and a wind-down bank, but the good news is that the core bank is very much open for new real estate lending.
Last year HSH Nordbank wrote €3bn of new commercial property lending business, up from 2012’s €2.6bn. This year the target is €3.5bn of new business. Of this €3.1bn is destined to remain on the bank’s own books, with €400m being syndicated to other banks. The bank is very specifically interested in talking to international investors about their German plans, is the loud and clear message. To help this along, the bank is opening a new branch office in Frankfurt – partly to discuss lending with pension funds, sovereign wealth funds and other institutionals for whom current lending prices are acceptable, if not so much for the opportunistic investors who need to access much cheaper funding.
The Frankfurt office will be the fifth in Germany (after Munich, Düsseldorf, Berlin and Stuttgart) apart from the Hamburg head office. Along with its Düsseldorf branch, HSH is clearly looking to mop up a chunk of the business that local matadors Eurohypo and Westimmo used to carve up, before their respective demises.
HSH Nordbank recently provided €200m in financing for the acquisition of the so-called ‘Kontor Portfolio’ by US group Castlelake, in partnership with Hamburg-based Becken-Gruppe. The portfolio consisted of 109 separate commercial properties (with office, retail and residential components) in and around Hamburg, with about 50% of the rental income coming from one client, the Hamburger Sparkasse.
Castlelake was established in 2005 and has assets under management of US$2.7bn, largely on behalf of charitable and educational foundations, sovereign and private pension funds and family offices worldwide. The high-profile local Hamburg commercial property investor Becken-Gruppe, led by Dieter Becken, joined the buyer as co-investor. Becken, one of the biggest names in Hamburg property development, said at the time, “We took a real close-up look at the portfolio and we see big potential down the line to sell off individual assets from the portfolio to project developers”.
Back in January, HSH stepped up to initially take over the sole financing of €270m for Morgan Stanley’s closed-end fund Morgan Stanley Real Estate Fund Global VII’s purchase of four shopping centres in Berlin and Dresden, along with co-investor Redos. REFIRE reported on this significant deal at the time – the shopping centres are anchored by retailer Kaufland, and are that retailer’s single biggest engagements in Germany, giving the centres a powerful local dominance.
Given the moves by alternative financiers to tentatively step into the financing breach, while at the same time being highly selective as to what they are prepared to look at, it almost felt good again to be in the company of traditional lenders – banks – prepared to hang out their shingle and declare they’re open for traditional real estate lending. Welcome back, HSH Nordbank.