HSH Nordbank in new loans to Brack, Gagfah
We reported in a recent issue of REFIRE on our meeting with Michael Windoffer, director at Hamburg and Kiel-based landesbank HSH Nordbank, which had a clear take-home message that the bank is back in business for real estate lending – after having to severely rein in its horns during the crisis years.
For foreign investors in Germany, the bank has been markedly raising its profile and level of access, helped by the opening of a new office in Frankfurt. This has already seen the €95m refinancing of two office complexes in Frankfurt for an American investment group last month – a 27,000 sqm refurbished property in the business district of Mertonviertel in the north of the city which is long-term leased to Lurgi GmbH, a subsidiary of Air Liquide group. The second asset is the 31,000 sqm Campus Carre in Niederrad with eight diverse tenants on long leases. Both properties are asset-managed by Round Hill Asset Management.
HSH has also just refinanced €125m of loans for 13 retail neighbourhood shopping centres for international investor Brack Capital Group. Nine of the centres are in Bavaria, Baden-Württemberg and North Rhine-Westphalia, with a further four in the eastern German states, with a total of 150,000 sqm of space let out long-term to well-known German retail names such as OBI, Kaufland and KiK. Brack has been active in Germany since 2004 in both commercial and residential investing, and has 120 people on the ground managing its more than 1.1m sqm of property.
Listed residential owner and manager Gagfah has also recently signed a fresh loan deal with HSH. The Luxembourg-based Gagfah, which owns 144,000 apartment units and managers a further 35,000 for third parties across Germany, confirmed the new loan facility for €176m to refinance a 4,400 unit portfolio in southern Germany. The 280,000 sqm GBH portfolio, which also includes 20 commercial properties, is largely located in Heidenheim, between Stuttgart and Munich.
The loan is divided into two tranches - The first tranche of €134m for the core portfolio has a maturity of seven years, while the second of €42m, with a three-year maturity, is secured by a portfolio which Gagfah plans to sell off. The weighted average interest rate of the new loan is 3.05%, putting it at 130bp lower than the previous loan. Gagfah also saves about 1% one-off refinancing fees it would have incurred had it exercised its two-year extension option with its previous lender.
Gagfah’s chief financial officer Gerald Klinck commented, “Securing stable and long-term financing for the GBH portfolio is another important step for us in our continuous efforts to improve our capital structure and maturity profile.”
Despite the new-found enthusiasm for real estate lending, HSH Nordbank is emerging from a difficult year, with results still weighed down by ever-higher provisions for bad debts in its shipping division. The bank posted an overall loss last year of €814m, fully €700m worse than in the previous year and the worst since 2008 when losses totalled €3bn. The bank was forced to rely on state guarantees of €10bn, which have cost €1.7bn in fees and charges so far, and are likely to be still needed for several years yet. In fact, the state guarantees were topped up to €10bn again in 2013 from €7bn, helping the bank to boost its core capital ratio from 9.9% to 11.7%. Since 2008 HSH has halved its balance sheet to about €109bn, while shedding a third of its staff in Hamburg and Kiel.
HSH Nordbank chairman Constantin von Oesterreich issued an optimistic statement at the bank’s press conference recently, with a return to profit foreseen for the current full year after a €200m first-quarter pre-tax profit. He said there was renewed commitment to the bank’s model of being “The Bank for Business Owners”, and that new business lending in the first quarter had doubled over last year to €2.1bn. For the full year, he forecast a rise in overall new business lending from €7.6bn to €9.4bn.